On April 2, Cindy Elston uses her JCPenney credit card to purchase merchandise from a JCPenney store for $1,000. On May 1, Elston is billed for the $1,000 amount due. Elston pays $500 on the balance due on May 3. Elston receives a bill dated June 1 for the amount due, including interest at 3% per month on the unpaid balance as of May 3. Prepare the entries on JCPenney Co’s books related to the transactions that occurred on April 2, May 3, and June 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit<\/p>\n\n\n\n
The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n To record the transactions on JCPenney’s books related to Cindy Elston\u2019s credit card purchase, payment, and subsequent billing, the following entries will be made:<\/p>\n\n\n\n When Cindy Elston makes a purchase on credit, JCPenney records a sale and an increase in receivables.<\/p>\n\n\n\n Date: April 2<\/strong><\/p>\n\n\n\n Explanation:<\/strong> On April 2, Elston buys $1,000 worth of merchandise on credit. The sale is recorded as an increase in accounts receivable and sales revenue.<\/p>\n\n\n\n Elston makes a partial payment of $500 on May 3, which reduces her outstanding balance.<\/p>\n\n\n\n Date: May 3<\/strong><\/p>\n\n\n\n Explanation:<\/strong> When Elston makes a $500 payment, the cash account increases and the accounts receivable balance is reduced accordingly.<\/p>\n\n\n\n On June 1, JCPenney bills Elston for the interest on her outstanding balance of $500, calculated at 3% per month.<\/p>\n\n\n\n The interest charged is: Date: June 1<\/strong><\/p>\n\n\n\n Explanation:<\/strong> JCPenney charges $15 interest (3% of $500) for the month of May. The accounts receivable increases to reflect the new balance owed by Elston, and the interest revenue is recognized.<\/p>\n\n\n\n These journal entries reflect the cash flow and accrual accounting practices used by JCPenney in handling credit transactions.<\/p>\n","protected":false},"excerpt":{"rendered":" On April 2, Cindy Elston uses her JCPenney credit card to purchase merchandise from a JCPenney store for $1,000. On May 1, Elston is billed for the $1,000 amount due. Elston pays $500 on the balance due on May 3. Elston receives a bill dated June 1 for the amount due, including interest at 3% […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-182040","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=182040"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/182040\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=182040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=182040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=182040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}April 2: Sale on Credit<\/h3>\n\n\n\n
Account Titles and Explanation<\/th> Debit<\/th> Credit<\/th><\/tr><\/thead> Accounts Receivable (Elston’s account)<\/td> $1,000<\/td> <\/td><\/tr> Sales Revenue<\/td> <\/td> $1,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n May 3: Payment Made<\/h3>\n\n\n\n
Account Titles and Explanation<\/th> Debit<\/th> Credit<\/th><\/tr><\/thead> Cash<\/td> $500<\/td> <\/td><\/tr> Accounts Receivable (Elston’s account)<\/td> <\/td> $500<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n June 1: Interest Billing<\/h3>\n\n\n\n
[ \\text{Interest} = 3\\% \\times 500 = 15 \\, \\text{(dollars)} ]<\/p>\n\n\n\nAccount Titles and Explanation<\/th> Debit<\/th> Credit<\/th><\/tr><\/thead> Accounts Receivable (Elston’s account)<\/td> $15<\/td> <\/td><\/tr> Interest Revenue<\/td> <\/td> $15<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Summary:<\/h3>\n\n\n\n
\n