1 / 9

Credit Sales and Receivables

Credit Sales and Receivables. Page 403 to 405. Methods of payment. Cash Debit cards Credit cards. Journal Entries to record debit/credit cards purchases – a credit card expense. DR Cash $X-Y DR Credit Card Expense $ Y CR Sales $X

tom
Download Presentation

Credit Sales and Receivables

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Credit Sales and Receivables Page 403 to 405

  2. Methods of payment • Cash • Debit cards • Credit cards

  3. Journal Entries to record debit/credit cards purchases – a credit card expense DR Cash $X-Y DR Credit Card Expense $ Y CR Sales $X Note: The credit card expense is the fee that is charged by credit card companies for use of their Card reading machines/services.

  4. Journal entry to record credit card sales DR Accounts Receivable, Credit Card Co. $X CR Sales $X This journal entry is made after the receipts to the credit card company have been sent and while the business waits for payment

  5. When payment is received from the credit card company… DR Cash $X-Y DR Credit Card Expense $Y CR Accounts Receivable – Credit Card Co. $X This journal entry records the receipt of cash less the credit card expense

  6. Adjusting Entries If a sale and cash receipt occur in different periods, you must report the credit card expense in the period of the sale by using an adjusting entry… Example on next slide…

  7. Example Credit card company has not paid $600 (an account receivable on the business side)… Credit card expensen = 4% of the sale… Entry # 1: Dec. 31: DR Credit card expense $24 CR Accounts Rec. – credit card co. $24

  8. Example cont’d Entry # 2 DR Cash $576 CR Accounts Rec. – credit card co. $576

  9. Questions Progress Check 8-4 to 8-5 QS 8-1to 8-3 Exercise 8-1 to 8-4

More Related