Question

Exercise 7-14A Recording Credit Card Sales LO 7-6 Luna Company accepted credit cards in payment for $6,950 of services performed during July Year 1. The credit card company charged Luna a 3.75 percent service fee; it paid Luna as soon as it received the invoices. Required. Prepare the general journal entry to record the service revenue. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to nearest whole dollar.)

Answer 1

See the explanation below:

Step-by-step explanation:

Interest expenses = $6,950 × 3.75% = $261

Cash received = $6,950 - $261 = $6,689

The payment an be in two forms; it can be immediate or delayed. The two are done below:

a. Journal Entries for Immediate payment

Details Dr ($) Cr ($)

Cash 6,689

Card expenses 261

Sales 6,950

b. Journal Entries for delayed payment

When the transaction is carried out, we have:

Details Dr ($) Cr ($)

Account receivables 6,689

Card expenses 261

Sales 6,950

When the payment is received, we have:

Details Dr ($) Cr ($)

Cash 6,689

Account receivables 6,689