Question

A company accepts Visa credit cards and incurs a 4% processing fee for each sale made to a customer using a credit card. Which of the following journal entries would record a $1,000 sale to a customer who uses their Visa card?

a) Debit Accounts Receivable $1,000; Credit Cash $1,000.
b) Debit Cash $1,000; Credit Sales Revenue $1,000.
c) Debit Cash $1,000; Credit Processing Fee Expense $40; Credit Sales Revenue $960.
d) Debit Cash $1,000; Credit Sales Revenue $1,000; Credit Processing Fee Revenue $40.

Answer 1

The correct journal entry to record a $1,000 sale to a customer using their Visa card is Debit Cash $1,000; Credit Sales Revenue $1,000; Credit Processing Fee Revenue $40. The correct answer is option d).

Step-by-step explanation:

The correct journal entry to record a $1,000 sale to a customer using their Visa card is option d) Debit Cash $1,000; Credit Sales Revenue $1,000; Credit Processing Fee Revenue $40.

When a customer uses their Visa card for a $1,000 purchase, the company would debit Cash for $1,000 to record the increase in cash received. They would then credit Sales Revenue for $1,000 to record the increase in revenue from the sale. Lastly, they would credit Processing Fee Revenue for $40 to record the fee incurred by the company for processing the credit card transaction.