ignment NEXT Brief Exercise 8-6 Consider these transactions: (Credit account tit

ID: 2563013 • Letter: I

Question

ignment NEXT Brief Exercise 8-6 Consider these transactions: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) Ivanhoe Company accepted a Visa card in payment of a $300 lunch bill. The bank charges a 3% fee, what entry should Ivanhoe Company make? (b) Swifty Corporation sold its accounts receivable of $69,100, what entry should Swifty Corporation make, given a service charge of 3% on the amount of receivables sold? Credit LINK TO TEXT t/test/qview.uni?id 4

Explanation / Answer

Answer to Part 1

Accounts title and explanation

Debit

Credit

(a)

Cash [300 - 9]

291

Service charges Expenses(300*3%)

Sales

300

Being Sales made for $ 300

(b)

Cash [(69100 - 2073)]

67027

Service charges Expenses [(69100*3%)]

2073

Accounts Receivable

69100

Being Accounts Receivable sold

Answer to Part 2

Computation of Cash Collections

Particulars

Amount ($)

Beginning Balance in Accounts Receivable

75580

Add: Credit Sales

576530

Less: Ending Balance in Accounts Receivable

94560

Cash Collections

557550