Question

A company received cash sales of $15000. They also collected $43000 in receivables during the month. Answer questions 4 to 6 with this information.
4. What is the journal entry for the collection of the receivables?


5. What is the journal entry for the collection of the sales?


6. If the sales received were all made by credit cards with a fee of 1.25%, what would be the journal entry for cash?

Answer 1

Answer:

4. Debit Cash account  $43,000

Credit Accounts receivable $43,000

Being entries to record cash received from credit sales made earlier

5. Debit Cash $15,000

Credit Sales revenue  $15,000

Being entries to recognize revenue generated from Cash sales.

6. Debit Cash $57,275

Debit Charges (expense)  $725

Credit Sales revenue  $58,000

Being entries to recognize revenue generated from Credit card sales.

Explanation:

When revenue is earned but cash is yet to be received,  the entries required are;

Debit Accounts receivable

Credit Revenue account

When cash is received,

Debit Cash account  

Credit Accounts receivable.

Total sales

= $15000 + $43,000

= $58000

Credit card charge

=  1.25% * $58000

= $725

Cash collected from credit card sales

= $58000 - $725

= $57275