ACCT 2101 Lecture Notes - Lecture 7: Direct Deposit, Accounts Receivable, Matching Principle

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yellowmosquito458

30 Aug 2016

School

University of Georgia

Department

Accounting

Course

ACCT 2101

Professor

Swati Bhandarkar

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Document Summary

Amounts due from customers for credit sales. Sales to customers who use credit cards. With bank credit cards, the seller deposits the credit card sales receipt in the bank just like it deposits a customer"s check. The bank increases the balance in the company"s account. The company usually pays a fee of 1% to 5% for the service. Accounting for credit card sales depends upon when cash will be received from the sale. Immediate on deposit of credit card receipt. Delayed until credit card company makes payment. Accounting for uncollectible accounts that result from credit sales. Some customers may not pay their account. Uncollectible amounts are referred to as bad debts. When an account receivable becomes uncollectible, a firm incurs a bad debt loss. Write off an account receivable as uncollectible when it is deemed to be uncollectible. Matching requires expenses to be reported in the same accounting period as the sales they help produce.

Related Questions

Please answer.

Credit Card Sales Historically, 60 percent of the customer bills at the Andrews' Supper Club have been paid with cash or check, and 40 percent have been paid using either the Great American Bank Card or the United Merchants Card. Andrews pays a 4% fee with both cards. Great American Bank deposits cash in Andrews' checking account when the credit card sales slips are deposited. United Merchants makes an electronic funds transfer three days after the sales slips are mailed. Prepare journal entries to record the following:

Round to the nearest dollar.

a.	Sales for September 10 were as follows:
	Cash and checks	$43,500
	Great American Bank Card (Deposited at the end of the day)	18,270
	United Merchants Card (Mailed at the end of the day)	16,530
		$78,300

b.	On September 13, Andrews received an electronic funds transfer from
	United Merchants for the September 10 sales.

General Journal
Date	Description	Debit	Credit
Sept.10	Cash	$Answer	$Answer
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue	Answer	Answer
	Credit Card Fee Expense	Answer	Answer
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue	Answer	Answer
	To record cash and credit card sales.

General Journal
Date	Description	Debit	Credit
Sept.13	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue	$Answer	$Answer
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue	Answer	Answer
	To record receipt of check from United Merchants.

ochrehornet688

1- A company allows its customers to use bank credit cards tocharge purchases. When customers use the credit cards, the netamount is deposited in the company's checking account. The companyalso is charged a 2.5% service charge for these credit card sales.Assume that on April 13, the company sold $25,000 worth ofmerchandise to customers who used credit cards. Prepare thecompany's journal entry to record the credit card sales for April13 assuming the company deposited the receipts that same day. ?

2- Crystal Products allows customers to use bank credit cards tocharge purchases. The bank used by Crystal Products processes allbank credit cards in exchange for a 3% processing fee. All creditcard receipts deposited are credited to the company account on theday of deposit. Assume that on January 18, Crystal Products soldand deposited $19,000 worth of bank credit card receipts. Preparethe general journal entry to record this transaction. ?

3- Describe how accounts receivable arise and how they areaccounted for, including the use of a subsidiary ledger and anallowance account. ?

.4- Define a note receivable and explain how interest iscalculated on a short-term note receivable. ?

5- Explain the options a company has when converting itsreceivables to cash. ?

raspberryeel30

Please answer

Credit Card Sales Ruth Anne's Fabrics accepts cash, personal checks, and two credit cards when customers buy merchandise. With the Great American Bank Card, Ruth Anne's Fabrics receives an immediate deposit in its checking account when credit card sales slips are deposited at the bank. The bank charges a 4% fee. With the United Merchants Card, Ruth Anne's Fabrics mails the credit card sales slips to United Merchants' regional processing center each day. United Merchants accumulates these slips for three days and then mails a check to Ruth Anne's Fabrics, after deducting a 3% fee. Prepare journal entries to record the following:

Round to the nearest dollar.

a.	Sales for March 15 were as follows:
	Cash and checks	$1,650
	Great American Bank Card (Deposited at the end of the day)	2,000
	United Merchants Card (Mailed at the end of the day)	1,500
		$5,150

b.	Received a check from United Merchants on March 20 for:	$5,888

General Journal
Date	Description	Debit	Credit
Mar.15	Cash	$Answer Incorrect 0.00 points out of 1.00	$Answer Correct 1.00 points out of 1.00
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue Correct 1.00 points out of 1.00	Answer Incorrect 0.00 points out of 1.00	Answer Correct 1.00 points out of 1.00
	Credit Card Fee Expense	Answer Correct 1.00 points out of 1.00	Answer Correct 1.00 points out of 1.00
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue Correct 1.00 points out of 1.00	Answer Correct 1.00 points out of 1.00	Answer Correct 1.00 points out of 1.00
	To record cash and credit card sales.

General Journal
Date	Description	Debit	Credit
Mar.20	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue Correct 1.00 points out of 1.00	$Answer Correct 1.00 points out of 1.00	$Answer Correct 1.00 points out of 1.00
	AnswerCashAccounts Receivable - United MerchantsCredit Card Fee ExpenseSales Revenue Correct 1.00 points out of 1.00	Answer Correct 1.00 points out of 1.00	Answer Correct 1.00 points out of 1.00
	To record receipt of check from United Merchants.

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ACCT 2101 Lecture Notes - Lecture 7: Direct Deposit, Accounts Receivable, Matching Principle

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