Question

Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 6.0% service charge for sales on its credit card. Access deducts a 5.0% service charge for sales on its card. Mayfair completes the following transactions in June.

June 4 Sold $600 of merchandise on credit (that had cost $240) to Natara Morris terms n/30.

5 Sold $9,900 of merchandise (that had cost $3,960) to customers who used their Zisa cards.

6 Sold $5,734 of merchandise (that had cost $2,294) to customers who used their Access cards.

8 Sold $4,350 of merchandise (that had cost $1,740) to customers who used their Access cards.

13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $571 balance in McKee’s account stemmed from a credit sale in October of last year.

18 Received Morris’s check in full payment for the purchase of June 4.

Required:

Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.)

Answer 1

Solution:

Journal Entries to record preceding Transaction and events

Date	Account Title and Explanation	Post Ref	Debit	Credit
Jun 4	Accounts receivables(Customer N)		$600
	Sales			$600
	(To record the credit sales)
Jun 4	Cost of goods sold		$240
	Merchandise inventory			$240
	(To record the cost of merchandise sold)
Jun 5	Cash		$9,306
	Credit card expense(9,900*6%)		$594
	Sales			$9,900
	(To record the sales)
Jun 5	Cost of goods sold		$3,960
	Merchandise inventory			$3,960
	(To record the cost of merchandise sale)
Jun 6	Accounts receivable		$ 5,447
	Credit card expenses($ 5,734 *5% )		$ 287
	Sales			$ 5,734
	(To record the sales)
Jun 6	cost of goods sold		$2,294
	Merchandise inventory			$2,294
	(To record the cost of merchandise sale)
Jun 8	Accounts receivable		$4,133
	Credit card expense($ 4,350 * 5%)		$217
	Sales			$ 4,350
	(To record the sales)
Jun 8	cost of goods sold		$1,740
	Merchandise inventory			$1,740
	(To record the cost of merchandise sale)
Jun 13	Allowance for doubtful accounts		$571
	Accounts receivable			$571
	(To write off an uncollectibile amount )
Jun 17	Cash($2,294 + $4,133)		$6,427
	Accounts receivable			$6,427
	(To record the cash received)
July 9	Cash		$570
	Discount($600* 5%)		$30
	Accounts receivable			$600
	(sold accounts receivable for cash less 4% fee)