Critical Thinking Problem 71 Recording sales, sales returns, and cash receipts f
ID: 2547713 • Letter: C
Question
Critical Thinking Problem 71 Recording sales, sales returns, and cash receipts for a retail store Athletic X-Press Sporting Goods began operations March 1, 2019. The firm sells its merchandise for cash; on open account: to customers using bank credit cards, such as MasterCard and Visa: and to customers using American Express. Merchandise sales are subject to an 8 percent sales tax. The bank credit cards charge a 3 percent fee. American Express charges a 4 percent fee. During March, Athletic X-Press Sporting Goods engaged in the following transactions: TRANSACTIONS DATE 2019 March 1 Sold merchandise on credit to Mark Everest: issued Sales Slip 101 for $700 plus sales tax of $56. 3 Sold merchandise on credit to Emily Ancheta; issued Sales Slip 102 for $300 plus sales tax of $24. 8 Accepted a return of merchandise from Mark Everest; the merchandise was originally sold on Sales Slip 101 of March 1; issued Credit Memorandum 1 for $108, which included sales tax of $8. 10 Received payment from Mark Everest in payment of his balance owed for merchandise sold on March 1, less the return of merchandise on March 8. 12 Sold merchandise on credit to Annie Han; issued Sales Slip 103 for $450 plus sales tax of $36. Recorded cash sales for the period from March 1 to March 15 of $5,000 plus sales tax of $400. 15 Recorded sales for the period from March 1 to March 15 to customers using bank credit cards of $7,000 plus sales tax of $560. (Record the 3 percent credit card expense at this time.) 25 Sold merchandise on credit to Jason Cataldo; issued Sales Slip 104 for $300 26 28 31 Recorded cash sales for the period from March 16 to March 31 of $5,500 31 Received payment from American Express for the amount billed on March plus sales tax of $24. Sold merchandise to customers using American Express for $3,000 plus sales tax of $240. Received a check from Annie Han of $100 to apply toward her account. plus sales tax of $440. 26, less a 4 percent fee. 31 Recorded sales for the period from March 16 to March 31 to customers using bank credit cards of $4,000 plus sales tax of $320. (Record the 3 per- cent credit card expense at this time.)Explanation / Answer
Journal Entries
March 1, 2019-
Accounts Receivable A/C – Dr 756
To Sales A/C – Cr 700
To Sales Tax Liability A/C – Cr 56
(being goods sold on credit to Mark Everest)
March 3 Accounts Receivable A/C – Dr 324
To Sales A/C – Cr 300
To Sales Tax Liability A/C – Cr 24
(being Goods sold on credit to Emily Ancheta)
March 8
Sales Return A/C – Dr 101
Sales Tax A/C – Dr 8
To Accounts Receivable A/C – Cr 109
(being Sales goods returned from Mark Everest)
March 10
Bank A/C – Dr 756-109= 647
To Accounts Receivable A/C- 647
( being the balance amount received from mark Everest)
March 12
Accounts receivable A/C – Dr 486
To sales A/C – 450
To Sales Tax A/C – 36
(being Sales made on credit to Annie Hann)
March 15
Cash A/C – 5400
To Sales A/c 5000
To Sales Tax A/C 400
(being cash sales from march 1 to march 15 and sales tax liability on such sales recorded)
March 15
Bank A/C – Dr (7000 Less 7000*3%) 6790+SalesTAx 560= 7350
Expenses A/C (7000*0.03) 210
To Sales A/C 7000
To Sales Tax A/C – 560
March 25
Accounts receivable A/C – Dr 324
To Sales A/C – 300
To Sales Tax A/C 24
(being Credit sales made to Jason Cataldo)
March 26
Accounts receivable A/C – Dr 3240
To Sales A/C 3000
To Sales Tax A/C -240
(being Sales made using American Express)
March 28
Bank A/C – Dr 100
To Accounts Receivable A/C -100
(being cheque received from Annie hann)
March 31
Cash A/C – Dr 5940
To Sales A/C 5500
To Sales Tax A/c 440
(being cash sales and sales tax liability recorded for the period march 15 to march 31)
Bank A/C Dr(3240 less 4%fee=3240*0.04)3110
Sales Commission A/C 4%of 3240= 130
To Accounts receivable A/c 3240
(being payment received from American Express reducing 4% sales Commission)
March 31
Bank A/C – Dr (4000 Less 4000*3%) 3880+SalesTAx 320= 4200
Expenses A/C (4000*0.03) 120
To Sales A/C 4000
To Sales Tax A/C – 320
(being Sales Recorded for which payments received via bank credit card less 3% card using fee)
5106
General Ledger Account Date Particulars $ Date Particulars $ 2019-march 2019-march Adjustments Adjustments Bank Sales 647+100 747 700+300+450+300+3000 4750 Sales Tax Sales Reurn 101 56+24+36+24+240 356 Sales Tax 8 To Bal C/D 4250 Total 5106 Total
5106
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