Question

Travel Inc. sells tickets for a Caribbean cruise on ShipAway Cruise Lines to Sheridan Company employees. The total cruise package price to Sheridan Company employees is $77,000. Travel Inc. receives a commission of 6% of the total price. Travel Inc. therefore remits $72,380 to ShipAway. Prepare the journal entry to record (1) the receipt of payment of $77,000 from employees for the cruise packages and (2) the remittance and revenue recognized by Travel Inc. on this transaction.

Answer 1

Explanation:

The journal entries are as follows

1. Cash A/c Dr $77,000

To Account payable - Shipway $77,000

(Being the receipt of the payment is recorded)

2. Account payable $77,000

To Sales revenue $4,620

To Cash $72,380

(Being the remittance and revenue is recorded)

The sales revenue is calculated below

= $77,000 × 6%

= $4,620