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, $25,000. The cost of the goods sold was $17,500.
B. Sold merchandise on account, $98,000. The cost of the goods sold was $58,800.
C. Sold merchandise to customers who used MasterCard and VISA, $475,000. The cost of the goods sold was $280,000.
D. Sold merchandise to customers who used American Express, $63,000. The cost of the goods sold was $39,000.
E. Received and paid an invoice from National Clearing House Credit Co. for $13,450, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

Journalize the entries for the transactions on December 31. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
General Ledger

ASSETS
110 Cash
120 Accounts Receivable
125 Notes Receivable
130 Inventory
131 Estimated Returns Inventory
140 Office Supplies
141 Store Supplies
142 Prepaid Insurance
180 Land
192 Store Equipment
193 Accumulated Depreciation-Store Equipment
194 Office Equipment
195 Accumulated Depreciation-Office Equipment

LIABILITIES
210 Accounts Payable
216 Salaries Payable
218 Sales Tax Payable
219 Customer Refunds Payable
220 Unearned Rent
221 Notes Payable

EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
313 Income Summary

REVENUE
410 Sales
610 Rent Revenue

EXPENSES
510 Cost of Goods Sold
521 Delivery Expense
522 Advertising Expense
524 Depreciation Expense-Store Equipment
525 Depreciation Expense-Office Equipment
526 Salaries Expense
531 Rent Expense
533 Insurance Expense
534 Store Supplies Expense
535 Office Supplies Expense
536 Credit Card Expense
539 Miscellaneous Expense
710 Interest Expense

Answer 1

A. Sold merchandise for cash, $25,000. The cost of the goods sold was $17,500.

Jounal for sales

Debit: 110 cash $25000

Credit: 410 Sales $25000

Journal for CGS

Debit: 510 Costs of Goods Sold $17500

Credit: 130 Inventory $17500

B.Sold merchandise on account, $98,000. The cost of the goods sold was $58,800.

Jounal for sales

Debit: 120 Accounts Receivable $98000

Credit: 410 Sales $98000

Journal for CGS

Debit: 510 Costs of Goods Sold $58,800

Credit: 130 Inventory $58,800

C. Sold merchandise to customers who used MasterCard and VISA, $475,000. The cost of the goods sold was $280,000.

Jounal for sales

Debit: 120 Accouints receivable $475000

Credit: 410 Sales $475000

Journal for CGS

Debit: 510 Costs of Goods Sold $280,000

Credit: 130 Inventory $280,000

D. Sold merchandise to customers who used American Express, $63,000. The cost of the goods sold was $39,000.

Jounal for sales

Debit: 120 Accounts receivable $63,000

Credit: 410 Sales $63,000

Journal for CGS

Debit: 510 Costs of Goods Sold $39,000

Credit: 130 Inventory $39,000

E. Received and paid an invoice from National Clearing House Credit Co. for $13,450, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

Debit: 110 Cash $ 524,550

Debit:: 536 Credit card Expense $13,450

Credit: 120 Accounts Receivable $538,000

Closing the sales account to Income summary account

Debit: 410 Sales $661,000

Credit: 313 Income Summary $661,000

Closing CGS and credit card expense to income summary account.

Debit: 313 Income summary $408,750

Credit: 510 Costs of Goods Sold $ 395,300

Credit: 536 Credit Card Expense $ 13,450

Transferring the net balance of income summary to retained earnings

Debit: 313 Income Summary $252,250

Credit: 311 Retained Earnings $252,250

Note: it is assumed that the payment for credit card from credit clearing house is not received immediately.