Question

Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system)

Sold $40,000 of merchandise, which cost $31,000, on Mastercard credit cards. Mastercard charges a 5% fee

Answer 1

To prepare the journal entries for credit card sales transactions, and record the revenue and associated fees. Debit Accounts Receivable and Credit Sales Revenue to record the sale. Debit Cost of Goods Sold and Credit Inventory to record the cost of goods sold. Debit Credit Card Fees Expenses and Credit Accounts Receivable to record the fee charged by Mastercard.

Step-by-step explanation:

To prepare the journal entries for credit card sales transactions, we need to record the revenue and the associated fees. In this case, the company sold merchandise worth $40,000 with a cost of $31,000. The revenue from the sale is $40,000, and we need to account for the 5% fee charged by Mastercard.

The journal entries would be:

1. To record the sale of merchandise:
   Debit Accounts Receivable $40,000
   Credit Sales Revenue $40,000
2. To record the cost of merchandise sold:
   Debit Cost of Goods Sold $31,000
   Credit Inventory $31,000
3. To record the fee charged by Mastercard:
   Debit Credit Card Fees Expense $2,000 ($40,000 * 5%)
   Credit Accounts Receivable $2,000