CREDIT CARD SALES: Assume that Z Company has $100 of credit card sales with a 4%...

Transcribed Image Text:

CREDIT CARD SALES: Assume that Z Company has $100 of credit card sales with a 4% fee, and its cash is received immediately on deposit. Record the joumal entry. Dr. Cr. Now assume instead that Z Company must remit copies of the credit card sales receipts to the credit card company and wait for payment. Record the joumal entry on the date of sale. Dr. Cr. l Record the joumal entry when the cash is received from the credit card company later on. Dr. Cr. VALUING ACCOUNTS RECEIVABLE: Direct Write-Off Method: Assume that X Company determines on January 23 that it cannot collect $520 owed to it by its customer Jack Kent. Recognize the loss using the direct write-off method. Dr. Assume that the account of Jack Kent that was previously written off is later collected. Record the joumal entries necessary. Dr. Allowance Method: Assume that X Company had credit sales of $300,000 during the year. At the end of the year, $20,000 of credit sales remained uncollected. Based on experience, X Company estimates. that $1,500 of its accounts receivable would be uncollectible. Record the estimated expense. Cr. Cr. Dr. Cr. After some time trying to collect from Jack Kent, X Company decides that Kent's $520 account is uncollectible. Record the correct entry. Dr. Cr. CREDIT CARD SALES: Assume that Z Company has $100 of credit card sales with a 4% fee, and its cash is received immediately on deposit. Record the joumal entry. Dr. Cr. Now assume instead that Z Company must remit copies of the credit card sales receipts to the credit card company and wait for payment. Record the joumal entry on the date of sale. Dr. Cr. l Record the joumal entry when the cash is received from the credit card company later on. Dr. Cr. VALUING ACCOUNTS RECEIVABLE: Direct Write-Off Method: Assume that X Company determines on January 23 that it cannot collect $520 owed to it by its customer Jack Kent. Recognize the loss using the direct write-off method. Dr. Assume that the account of Jack Kent that was previously written off is later collected. Record the joumal entries necessary. Dr. Allowance Method: Assume that X Company had credit sales of $300,000 during the year. At the end of the year, $20,000 of credit sales remained uncollected. Based on experience, X Company estimates. that $1,500 of its accounts receivable would be uncollectible. Record the estimated expense. Cr. Cr. Dr. Cr. After some time trying to collect from Jack Kent, X Company decides that Kent's $520 account is uncollectible. Record the correct entry. Dr. Cr.