[Maxi95]

**PROBLEM I**

1. Each year MaryK holds an annual “Puppy Paradise Lua” (PP-Lua) at the town’s only Pet Restaurant – MaryK’s House. This includes dinner and spa treatment for the puppies and their owners.

The PP-Lua is catered by Dr. Miller. Dr. Miller will charge all food and beverage costs for the owners pets 10 years of age and under on an American Express credit card. This year Dr Miller’s catering bill totals $2,000. So the Pet Restaurant (MaryK's House) used Dr. Miller's AMEX card to pay for this portion of the bill.

MaryK’s House budgets $12,000 for the event for all costs. Food and beverage costs account for 60% of all expenses. MaryK’s House actual expenses came in right on budget this year.

Local corporate sponsors contribute an additional $5,000 to MaryK’s House. The local PetsMart store is a major partner and agreed to contribute $9,500 this year.

Ticket sales and other revenue items for MaryK's were as follows:

- Food and Beverage sales: $7,120
- Sponsorships: calculate Petsmart contribution PLUS local sponsorship as noted above.

Instructions
(a) Assume a 4% service fee is charged by American Express. Record the entry for the transaction on the restaurant's books for Dr. Miller’s AMEX credit card transaction .

(b) Record the entry that the restaurant will make when it receives payment from American Express.

(c) Is this years Puppy Paradise Lua profitable? What amount of net income or net loss will MaryK’s House record from this event? List out all revenue components … and all expenses … and calculate net income.





**PROBLEM II**

MMK Café has the following accounts receivable in its general ledger at July 31: Accounts Receivable $32,000 and Accounts Receivable—American Express $2,500. During August, the following transactions occurred.

Aug. 1 Added 1 ½% finance charges to $10,000 of credit card balances for not paying within the 30 day grace period.

Aug 10 Received cash from American Express Co. for July 31.

Aug 25 Made $2,000 of American Express Co. credit card sales less 5% service charge.


Instructions
Journalize the transactions.

[CaptainForest]

Please see this thread on Homework Questions:
https://www.askmehelpdesk.com/financ...uncements.html