Question

Exercise 8-8 Presented below are two independent situations.

On April 2, Jennifer Elston uses her JCPenney Company credit card to purchase merchandise from a JCPenney store for $1,000. On May 1, Elston is billed for the $1,000 amount due. Elston pays $700 on the balance due on May 3. On June 1, Elston receives a bill for the amount due, including interest at 1.0% per month on the unpaid balance as of May 3. Prepare the entries on JCPenney Co.’s books related to the transactions that occurred on April 2, May 3, and June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

On July 4, Spangler’s Restaurant accepts a Visa card for a $500 dinner bill. Visa charges a 2% service fee. Prepare the entry on Spangler’s books related to this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

SOLUTION

S.No.	Date	Accounts titles and Explanation	Debit ($)	Credit ($)
1.	April 2	Accounts Receivable	1,000
		Sales Revenue		1,000
	May 3	Cash	700
		Accounts Receivable		700
	June 1	Accounts Receivable	3
		Interest Revenue [(1,000-700)*1%]		3
2.	July 4	Cash	490
		Service Charge (500*2%)	10
		Sales Revenue		500