Description
In this assignment, we will learn that credit cards charge merchants fees for transactions. We will understand how to calculate fees and make corresponding journal entries.
Download AC107 Unit 7 Merchant Fees Template Download AC107 Unit 7 Merchant Fees Template[Excel Spreadsheet]
Follow the instructions found in the template
Rename your spreadsheet adding your last name to the file name (Ex. AC107 Unit 7 Assignment – Calculating Merchant Fees LastName)
Submit your completed spreadsheet
Part 2
In this assignment, we will learn how to prepare journal entries to write off an uncollectable account using the Direct Write off method.
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Follow the instructions found in the template
Rename your spreadsheet adding your last name to the file name (Ex. AC107 Unit 7 Assignment – Direct Write Off Journal Entries LastName)
Submit your completed spreadsheet
Part 3
In this assignment, we will learn how to prepare journal entries to write off an uncollectable account using the Allowance method.
Download AC107 Unit 7 Allowance Method Template Download AC107 Unit 7 Allowance Method Template[Excel Spreadsheet]
Follow the instructions found in the template
Rename your spreadsheet adding your last name to the file name (Ex. AC107 Unit 7 Assignment – Allowance Method Journal Entries LastName)
Submit your completed spreadsheet
Part 4
In this assignment, we will estimate the amount for the allowance account by analyzing and aging Accounts Receivable.
Download AC107 Unit 7 Receivable Aging Template Download AC107 Unit 7 Receivable Aging Template[Excel Spreadsheet]
Follow the instructions found in the template
Rename your spreadsheet adding your last name to the file name (Ex. AC107 Unit 7 Assignment – Prepare a Receivables Aging LastName)
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Unformatted Attachment Preview
Calculating Merchant Fees
Lockey Company uses the perpetual inventory system and allows customers to use two credit
cards in charging purchases. With the Oliver Bank Card, a 4% service charge for credit card
sales is assessed. The second credit card that Lockey accepts is the Cooper Card. Cooper
assesses a 2.5% charge on sales for using its card.
November
8
Sold merchandise for $6,000 (that had cost $4,434) and accepted the customer’s Olivers’s Bank
Card.
12
Sold merchandise for $5,600 (that had cost $3,629) and accepted the customer’s Cooper Card.
Prepare journal entries to record the above selected credit card transactions of Lockey
Company. (Round your answers to the nearest whole dollar amount.)
No
1
2
3
4
Date
General Journal
Debit
Credit
Direct Write off Method journal entries
Barlow Company applies the direct write-off method in accounting for uncollectible
accounts.
March
11 Barlow determines that it cannot collect $9,900 of its accounts receivable from its customer Loggan
Company.
29 Loggan Company unexpectedly pays its account in full to Barlow Company. Barlow records its
recovery of this bad debt.
Prepare journal entries to record the above selected transactions of Barlow.
No
1
2
3
Date
General Journal
Debit
Credit
Write off using the Allowance method
At year-end (December 31), Kneller Company estimates its bad debts as 0.60% of its annual
credit sales of $919,000. Kneller records its Bad Debts Expense for that estimate. On the
following February 1, Kneller decides that the $460 account of M Monamy is uncollectible
and writes it off as a bad debt. On June 5, Monamy unexpectedly pays the amount
previously written off.
Prepare the journal entries for these transactions using the allowance method.
No
1
2
3
4
Date
General Journal
Debit
Credit
Aging Receivables
Wright Company estimates uncollectible accounts using the allowance method at December 31. It
prepared the following aging of receivables analysis.
Days Past Due
Accounts receivable
Percent uncollectible
Total
645,500
0 1-30
411,000 105000
1%
2%
31-60
61-90
over 90
51500
33,000 45000
5%
7%
10%
a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using
the aging of accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a . Assume the
unadjusted balance in the Allowance for Doubtful Accounts is a $5,100 credit.
c. Prepare the adjusting entry to record bad debts expense using the estimate from part a . Assume the
unadjusted balance in the Allowance for Doubtful Accounts is a $1,600 debit.
Accounts
Receivable
$
Not due:
1 to 30:
31 to 60:
61 to 90:
Over 90:
Percent
Uncollectible (%)
%
x
x
x
x
x
=
=
=
=
=
Estimated balance of allowance for uncollectibles
credit
= debit or credit?
Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a . Assume the
unadjusted balance in the Allowance for Doubtful Accounts is a $5,100 credit.
Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the
unadjusted balance in the Allowance for Doubtful Accounts is a $1,600 debit.
No
1
2
Date
General Journal
Debit
Credit
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