Question

Journalize the entries for the following transactions. Refer to the Chart of Accounts for exact wording of account titles. (Note: The company uses a clearinghouse to take care of all bank as well as non-bank credit cards used by its customers. )

A. Sold merchandise for cash, $30,500. The cost of the goods sold was $16,165.
B. Sold merchandise on account, $254,300. The cost of the merchandise sold was $134,779
C. Sold merchandise to customers who used MasterCard and VISA, $162,900. The cost of the merchandise sold was $86,337.
D. Sold merchandise to customers who used American Express, $72,000. The cost of the merchandise sold was $38,160.
E. Received and paid an invoice from National Clearing House Credit Co. for $7,010, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

Answer 1

Answer and Explanation:

The journal entries are shown below:

A. Cash Dr $30,500

To Sales revenue $30,500

(Being the merchandise is sold for cash)

For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue

Cost of goods sold Dr $16,165

To Merchandise inventory $16,165

(being the cost of goods sold is recorded)

For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited

B. Account receivable Dr $254,300

To Sales revenue $254,300

(Being the merchandise sold for account)

For recording this we debited the account receivable as it increased the assets and credited the sales revenue as it also increased the revenue

Cost of goods sold Dr $134,779

To Merchandise inventory $134,779

(being the cost of goods sold is recorded)

For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited

C. Cash Dr $162,900

To Sales revenue $162,900

(Being the merchandise is sold for cash)

For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue

Cost of goods sold Dr $86,337

To Merchandise inventory $86,337

(being the cost of goods sold is recorded)

For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited

D. Cash Dr $72,000

To Sales revenue $72,000

(Being the merchandise is sold for cash)

For recording this we debited the cash as it increased the assets and credited the sales revenue as it also increased the revenue

Cost of goods sold Dr $38,160

To Merchandise inventory $38,160

(being the cost of goods sold is recorded)

For recording this we debited the cost of goods sold as it increased the expenses and reduced the assets so merchandise inventory is credited

E. Credit card expenses Dr $7,010

To Cash $7,010

(Being the cash paid is recorded)

For recording this we debited the credit card expense as it increased the expenses and reduced the assets so cash is credited