Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 6.5% service charge for sales on its credit card and credits the bank account of Mayfair immediately when credit card receipts are deposited. Mayfair deposits the Zisa credit card receipts each business day. When customers use Access credit cards, Mayfair accumulates the receipts for several days before submitting them to Access for payment. Access deducts a 5.5% service charge and usually pays within one week of being billed. Mayfair completes the following transactions in June. (The terms of all credit sales are 2/15, n/30, and all sales are recorded at the gross price.) 4 Sold $600 of merchandise (that had cost $300) on credit to Natara Morris.
5 Sold $9,400 of merchandise (that had cost $4,700) to customers who used their Zisa cards.
6 Sold $5,674 of merchandise (that had cost $2,837) to customers who used their Access cards.
8 Sold $4,250 of merchandise (that had cost $2,125) to customers who used their Access cards.
10 Submitted Access card receipts accumulated since June 6 to the credit card company for payment.
13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $473 balance in McKee’s account stemmed from a credit sale in October of last year.
17 Received the amount due from Access.
18 Received Morris’s check in full payment for the purchase of June 4.

Required:
Prepare journal entries to record the preceding transactions and events.

4-Jun

Dr Accounts receivable—N. Morris600

Cr Sales 600

4-Jun

Dr Cost of goods sold300

Cr Merchandise inventory 300

5-Jun

Dr Cash8,883

Dr Credit card expense517

Cr Sales 9,400

5-Jun

Dr Cost of goods sold4,700

Cr Merchandise inventory 4,700

6-Jun

Dr Accounts receivable—Access5,560

Dr Credit card expense113.5

Cr Sales$5,674

6-Jun

Dr Cost of goods sold 2,837

Cr Merchandise inventory 2,837

8-Jun

DrAccounts receivable—Access4,165

Dr Credit card expense85

Cr Sales $4,250

8-Jun

Dr Cost of goods sold$2,125

Cr Merchandise inventory $2,125

10-JunNo journal entry required

13-Jun

Dr Allowance for doubtful accounts473

Cr Accounts receivable—A. McKee 473

17-Jun

Dr Cash9,725

Cr Accounts receivable—Access 9,725

18-Jun

Dr Cash588

Dr Sales discounts12

Cr Accounts receivable—N. Morris 600

Explanation:

Preparation of the journal entries to record the preceding transactions and events.

4-Jun

DrAccounts receivable—N. Morris600

Cr Sales 600

4-Jun

Dr Cost of goods sold300

Cr Merchandise inventory 300

(Being to record Sales on credit)

5-Jun

Dr Cash8,883

(9,400-517)

Dr Credit card expense517

(5.5%*9,400)

Cr Sales 9,400

5-Jun

Dr Cost of goods sold4,700

Cr Merchandise inventory 4,700

6-Jun

Dr Accounts receivable—Access5,560.5

($5,674-113.5)

Dr Credit card expense113.5

($5,674*2%)

Cr Sales$5,674

6-Jun

Dr Cost of goods sold 2,837

Cr Merchandise inventory 2,837

8-Jun

DrAccounts receivable—Access4,165

($4,250-$85)

Dr Credit card expense85

(2%*$4,250)

Cr Sales $4,250

8-Jun

Dr Cost of goods sold$2,125

Cr Merchandise inventory $2,125

10-JunNo journal entry required

13-Jun

Dr Allowance for doubtful accounts473

Cr Accounts receivable—A. McKee 473

17-Jun

Dr Cash9,725

Cr Accounts receivable—Access 9,725

(5,560+4,165)

18-Jun

Dr Cash588

(600-12)

Dr Sales discounts12

(2%*600)

Cr Accounts receivable—N. Morris 600

answer; hazards;

the correct option is c