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Chapter 7: Q5TI (page 395)

Phoenix Restaurants accepts credit and debit cards as forms of payment. Assume Phoenix had $12,000 of credit and debit card

sales on June 30, 2017.

9. Suppose Phoenix鈥檚 processor charges a 2% fee and deposits sales net of the fee. Journalize the sale transaction for the

restaurant.

10. Suppose Phoenix鈥檚 processor charges a 2% fee and deposits sales using the gross method. Journalize the sale transaction for

the restaurant.

Short Answer

Expert verified

The cash account is debited with $12,000 and the sales account is credited with $12,000.

Step by step solution

01

Definition of credit card

Credit card is a special type of the card that facilitates customers to purchase on credit.

02

Journal entries

Date

Particulars

Debit

Credit

June 30, 2017

Cash

$11,760

Credit Card Expense

$240

Sales

$12,000

(Being entry to record sale on credit card)

June 30, 2017

Cash

$12,000

Sales

$12,000

(To record the sales receipt)

June 30, 2017

Credit Card Expense

$240

Cash

$240

(Entry for the payment of credit card expense)

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Most popular questions from this chapter

Fill in the missing information.

a. The vendor ships the inventory and sends a(n) __________ back to the purchaser.

b. After approving all documents, the purchaser sends a(n) __________ to the vendor.

c. When ordering merchandise inventory, the purchaser sends a(n) __________ to the vendor.

d. The purchaser receives the inventory and prepares a(n) __________.

Accounting for petty cash transactions

Suppose that on June 1, Rockin鈥� Gyrations, a disc jockey service, creates a petty cash

fund with an imprest balance of \(300. During June, Michael Martell, fund custodian,

signs the following petty cash tickets:

Petty Cash

Ticket Number Item Amount

1 Postage for package received \) 30

2 Office party 25

3 Two boxes of stationery 20

4 Printer cartridges 15

5 Business dinner 65

On June 30, prior to replenishment, the fund contains these tickets plus cash of \(140.

The accounts affected by petty cash payments are Office Supplies, Entertainment

Expense, and Postage Expense.

Requirements

1. On June 30, how much cash should this petty cash fund hold before it is replenished?

2. Journalize all required entries to (a) create the fund and (b) replenish it. Includeexplanations.

3. Make the entry on July 1 to increase the fund balance to \)325. Include an explanation

When are the only times the Petty Cash account is used in a journal entry?

Using Excel for a Bank Reconciliation

Download an Excel template for this problem online in MyAccountingLab or athttp://www.pearsonhighered.com/Horngren.

Lori Anders of Wilderness Associates is getting ready to prepare the October bank reconciliation.

The cash balance on the books of Wilderness Associates on October 31 is \(3,546.

Lori reviews the bank statement, and notes the checking account balance at October 31 is \)2,445. The bank statement also

reveals that the bank collected a note receivable on behalf of Wilderness Associates鈥攖he principal was \(1,500 and the interest

was \)15. One customer鈥檚 check for \(29 was returned by the bank for insufficient funds. Two additional items on the bank statement

were the monthly EFT for the utilities, \)250, and the bank service fee of \(12. Lori notes that the cash deposit made on

October 31 of \)3,300 does not appear on the statement, and that three checks totaling $975 had not cleared the bank account

when the bank statement was prepared.

Requirements

1. Prepare the bank reconciliation for Wilderness Associates at October 31, 2018. Format appropriate cells with dollar signs and double

underlines. Use Excel formulas to calculate subtotals and totals.

2. Journalize the entries based on the bank reconciliation. For dollar amounts, use cell references on bank reconciliation

Match the accounting terminology to the definitions.

1. Sarbanes-Oxley Act

2. Internal control

3. Encryption

4. Separation of duties

5. Internal auditors

a. Organizational plan and all the related measures adopted by an entity to safeguard assets,

encourage employees to follow company policies, promote operational efficiency, and ensure

accurate and reliable accounting records.

b. Employees of the business who ensure that the company鈥檚 employees are following company

policies and meeting legal requirements and that operations are running efficiently.

c. Rearranging plain-text messages by a mathematical process鈥攖he primary method of

achieving security in e-commerce.

d. Requires companies to review internal control and take responsibility for the accuracy and

completeness of their financial reports.

e. Dividing responsibilities between two or more people.
See all solutions

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