Question

Prepare journal entries for the following credit card sales transactions.

1. Sold $20,000 of merchandise, which cost $15,000, on MasterCard credit cards. Master Card charges a 5% fee.
2. Sold $5,000 of merchandise, which cost $3,000, on an assortment of bank credit cards. These cards charge a 4% fee.

Answer 1

Answer and Explanation:

The journal entries are given below:

1. Cash A/c Dr $19,000

Credit card expense A/c Dr $1,000 ($20,000 × 5%)

To Sales A/c $20,000

(To record the received cash )

Cost of goods sold A/c Dr $15,000

To Merchandise inventory A/c $15,000

(To record the inventory is sold at cost)

2. Accounts receivable A/c Dr $4,800

Credit card expense A/c Dr $200 ($5,000 × 4%)

To Sales A/c $5,000

(To record the merchandise is sold on credit)

Cost of goods sold A/c Dr $3,000

To Merchandise inventory A/c $3,000

(To record the inventory is sold at cost)

Cash A/c Dr $4,800

To Accounts receivable $4,800

(to record the cash is received)