Question

Archer Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Commerce Bank or Aztec. Commerce Bank deducts a 3% service charge for sales on its credit card and immediately credits the bank account of Archer when credit card receipts are deposited. Archer deposits the Commerce Bank credit card receipts each business day. When customers use the Aztec card, Archer accumulates the receipts for several days and then submits them to Aztec for payment. Aztec deducts a 2% service charge and usually pays within one week of being billed. Archer completed the following transactions in August (terms of all credit sales are 2/10, n/30: and all sales are recorded at the gross price). Aug. 4 Sold $3,700 of merchandise (that had cost $2.000) on credit to Mckenzie Carpenter. 10 Sold $5.200 of merchandise (that had cost $2,800) to customers who used their Commerce Bank credit cards. Sold $1,250 of merchandise (that had cost $900) to customers who used their Aztec cards. 14 Received Carpenter's check in full payment for the purchase of August 4 15 Sold $3,240 of merchandise (that had cost $1,758) to customers who used their Aztec cards. 18 Submitted Aztec card receipts accumulated since August 11 to the credit card company for payment. 22 Wrote off the account of Craw Co. against the Allowance for Doubtful Accounts. The $498 balance in Craw Co's account stemmed from a credit sale in November of last year 25 Received the amount due from Aztec. Required Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system. Round amounts to the nearest dollar.)

Answer 1

	Arcer Co.
	Journal entries;
Date	Account's tittle	Debit $	Credit $
4-Aug	Accounts Receivable	3,700
	Sales Revenue		3,700
	( To be record sale of merchandise on credt at a term 2/10,n/30 )
4-Aug	Cost of goods sold	2,000
	Merchandise Inventory		2,000
	( To record adjustment of cost of goods sold )
10-Aug	Credit Card Receivable	5,200
	Sales Revenue		5,200
	( To record sale of merchandise on Commerce Bank credit card )
10-Aug	Cost of goods sold	2,800
	Merchandise Inventory		2,800
	( To record adjustment of cost of goods sold )
10-Aug	Credit Card Service Charges ( $ 5,200 x 3% )	156
	Cash ( $ 5,200 - $ 156 )	5,044
	Credit Card Receivable		5,200
	( To record submission of credit card receipts to the bank )
11-Aug	Credit Card Receivable	1,250
	Sales Revenue		1,250
	( To record sale of merchandise on Aztec credit card )
11-Aug	Cost of goods sold	900
	Merchandise Inventory		900
	( To record adjustment of cost of goods sold )
14-Aug	Sales discount ( $ 3,700 x 2% )	74
	Cash ( $ 3,700 - $ 74 )	3,626
	Accounts Receivable		3,700
	( To record receipt of cash from customer after discount as per the term )
15-Aug	Credit Card Receivable	3,240
	Sales Revenue		3,240
	( To record sale of merchandise on Aztec credit card )
15-Aug	Cost of goods sold	1,758
	Merchandise Inventory		1,758
	( To record adjustment of cost of goods sold )
18-Aug	Accounts Receivable from Aztec ( $ 1,250 + $ 3,240 )	4,490
	Credit Card Receivable		4,490
	( To record submission of credit card receipts to Aztec the bank )
22-Aug	Allowance for Doubtful Accounts	498
	Accounts Receivable		498
	( to record account receivable written off against allowance for doubtful account )
25-Aug	Credit Card Service Charges {( $ 1,250 + $ 3,240 ) x 2% )	90
	Cash ( $ 1,250 + $ 3,240 - $ 89.8 )	4,400
	Accounts Receivable from Aztec		4,490
	(To record amount received form Aztec )