Question

Tony's restaurant accepted a visa card in payment of a $175 lunch bill. the bank charges a 4% fee. what entry should tony's make? identify different types of receivables. (lo 1) record basic accounts receivable transactions. (lo 2) prepare entry for allowance method and partial balance sheet. (lo 3, 9) prepare entry for write-off; determine cash realizable value. (lo 3) prepare entries for collection of bad debt write-off. (lo 3) prepare entry using percentage-of-sales method. (lo 3) prepare entry using percentage-of-receivables method. (lo 3) prepare entries to dispose of accounts receivable. (lo 4) 412 8 accounting for receivables (b) larkin company sold its accounts receivable of $60,000. what entry should larkin make, given a service charge of 3% on the amount of receivables sol

Answer 1

1) There are two types of methods:

immediate payment

Dr Cash 168

Dr Credit card fees 7

Cr Service revenue 175

or delayed payment

Dr Accounts receivable 175

Cr Service revenue 175

Dr Cash 168

Dr Credit card fees 7

Cr Accounts receivable 175

Credit card companies process payments in two ways: they pay the businesses immediately or they might pay them in 2-3 days after they have finished processing the transaction.

2b) Larkin company sold its accounts receivable of $60,000.

Dr Cash 58,200

Dr Factoring fees 1,800

Cr Accounts receivable 60,000

Factoring companies are businesses that purchase accounts receivables from other companies and collect them themselves.

*There are several parts of this question that do not make sense since there is no information.