Credit card sales
Prepare
1. Sold $20,000 of merchandise, which cost $15,000, on MasterCard credit cards. MasterCard charges a 5% fee.
2. Sold $,000 of merchandise, which cost $3,000, on an assortment of bank credit cards. These cards charge a 4% fee.
Credit Card Sales:
Credit card sales refer to those sales, the payment of which is received through credit card from the customer.
Journal Entries:
Journal entries are used to record the transactions of an organization in a chronological order. Based on these journal entries, the amounts are posted to the relevant ledger accounts.
Accounting Rules for Journal Entries:
- To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
- To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.
To prepare:
Journal entries.
Answer to Problem 1QS
Solution:
Sale of merchandise on credit:
Date | Account Title and Explanation | Post ref. | Debit($) | Credit($) |
Cash | 19,000 | |||
Credit Card Expenses | 1,000 | |||
Sales | 20,000 | |||
(Record credit card sales less 5% fee.) |
- Table (1)
Explanation of Solution
- Cash account is an asset account and it record an increase, hence it is debited.
- Credit card expenses account is an expense account, it records an increase, and hence it is debited.
- Sales account is a revenue account, it records an increase, and hence it is credited.
Working note:
Given,
Sales are $20,000.
Credit card fee is 5%.
Calculation of credit card expenses,
Calculation of cash received,
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Chapter 9 Solutions
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