Question

Sold $5,300 of merchandise, which cost $3,150, on an assortment of bank credit cards. These cards charge a 4% fee. - Record journal entry.

a. Debit: Cash $5,088; Credit: Sales Revenue $5,300, Cost of Goods Sold $3,150, Credit Card Fees $112
b. Debit: Cash $5,088; Credit: Sales Revenue $5,300, Cost of Goods Sold $3,150
c. Debit: Cash $5,300; Credit: Sales Revenue $5,300, Cost of Goods Sold $3,150, Credit Card Fees $212
d. Debit: Cash $5,300; Credit: Sales Revenue $5,300, Cost of Goods Sold $3,150

Answer 1

The correct journal entry for the sale of merchandise on bank credit cards that charge a 4% fee is to debit Cash for $5,088, debit Credit Card Fees for $212, credit Sales Revenue for $5,300, debit Cost of Goods Sold for $3,150, and credit Inventory for $3,150.

Step-by-step explanation:

The student is seeking assistance with how to record a journal entry for merchandise sold on credit cards that charge a fee.

The correct journal entry to reflect the sale of merchandise costing $3,150 for a total of $5,300 on credit cards that charge a 4% fee would involve several parts: recording the sales revenue, the cost of goods sold (COGS), the cash amount received after the credit card fee and the fee itself. The credit card fee can be calculated as 4% of $5,300, which is $212. The entry is:

• Debit: Cash $5,088 ($5,300 - $212)
• Debit: Credit Card Fees $212
• Credit: Sales Revenue $5,300
• Debit: Cost of Goods Sold $3,150
• Credit: Inventory $3,150

This accounting entry acknowledges the cost associated with selling the goods, registers the revenue, and shows the real amount of cash that will be received from the credit card companies after they deduct their fees.