Question

Exercise 8-9 on july 4, crane company accepts a visa card for a $50 dinner bill. visa charges a 2% service fee. prepare the entry on crane company's books related to the transaction. (credit account titles are automatically indented when amount is entered. do not indent manually.)

Answer 1

cash $49

credit card expenses $1

sales revenues $50

Credit card sales of $50 result in a credit (increase) to sales revenues of $50. The credit card fee equals ($50) (0.02) = $1 and should be recorded as a debit (increase) to credit card expense. The amount of cash received is the amount of the sales ($50) less the credit card fee ($1) and should be debited (increase) to cash.