EXERCISE 7-13A Superior Carpet Cleaning provided $76,000 of services during 2013, its first year of operation. All customers paid for the services with major credit cards. Superior submitted th ecredit cards receipts to the credit card company immediately. The credit card company paid Superior cash in the amount of face value less a 3 percent service charge.
a. record the credit card sales and the subsequent collection of accounts receivable in a horizontal statements model like the one shown here. In the Cash Flow column, indicate whether the item is an operating activity(OA), investing activity(IA), or financial activity(FA). Use NA to indicate that an element is not affected by the event.
b. what is the amount of total assets at the end of the accounting period?
what is the amount of revenue reported on the income statement?
what is the amount of cash flow from operating activities reported onthe statement of cash flow?
Why would Superior Carpet Cleaning accept credit cards instead of providing credit directly to its customers? Why would they be willing to pay 3% of sales to have the credit card company handle its sales on account?
EXERCISE 8-9A
Sam’s Subs purchased a delivery van on Jan. 1, 2013, for $35,000. In addition, Sam’s paid sales tax and title fees of $1,500 for the van. The vanis expected to have a four-year life and a salvage value of $6.500.
a. using the straight-line method, compute the depreciationexpense for 2013 and 2014.
b. prepare the general journal entry to record the 2013 depreciation.
c. assume the van was sold on Jan.1,2016, for $21,000. Prepare the journal entry for the sale of the van in 2016.
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