Consider these transactions: (a) Draber Restaurant accepted a Visa card in payme
ID: 2460242 • Letter: C
Question
Consider these transactions: (a) Draber Restaurant accepted a Visa card in payment of a $500 lunch bill. The bank charges a 4% fee. What entry should Draber make? (b) Marin Company sold its accounts receivable of $79,300. What entry should Marin make, given a service charge of 5% on the amount of receivables sold? Exercise 8-5 Stine Company has accounts receivable of $100,400 at March 31, 2014. An analysis of the accounts shows these amounts. Credit terms are 3/10, n/30. At March 31, 2014, there is a $2,500 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company estimating uncollectible accounts. The company's estimates of bad debts are as shown below.Explanation / Answer
Exercise 8 - 11 Journal Entries Sr.No. Account title Debit Credit a Cash 480 Bank charges 20 Sales 500 b Cash 75335 Service charges 3965 Account Receivables 79300 Exercise 8 - 5 Month of sale Account receivable balance Estimated % of uncollectibles Uncollectibles Mar-14 68300 6% 4098 Feb-14 13500 30% 4050 Dec & Jan 2014 10100 30% 3030 Nov & Oct 2014 8500 54% 4590 15768 The total estimated uncollectibles $15768 Journal Entry Account titles Debit Credit Bad Debt 13268 Allowance for doubtful accounts 13268 ($15768 - $2500) Exercise 8 - 7 Journal Entries Date Account title Debit Credit Nov.1 9% note receivables (B Carr) 55100 Cash 55100 Dec.11 9% note receivables (R P Kinner Inc) 4600 Sales 4600 Dec,16 Cash 14700 8% Note receivable (M.Adcock) 14700 Dec-31 B Carr 826.5 Accrued Interest 826.5 (Interest accrued for 2 months) Dec-31 R P Kinner Inc 92 Accrued Interest 92 (Interest accrued for 20 days)