Question

Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 3% charge on sales for using its card. On June 28, Jervis had $3,500 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?

a. Debit Cash $3,500; credit Sales $3,500
b. Debit Accounts Receivable $3,500; credit Sales $3,500
c. Debit Cash $3,605; credit Credit Card Expense $105; credit Sales $3,500
d. Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500

Answer 1

D) Debit Cash $3,395; debit Credit Card Expense $105; credit Sales $3,500

Step-by-step explanation:

Generally credit cards are paying the stores or businesses immediately, so the transaction should be debited as a cash payment minus the credit card fee. You must recognize the complete amount of the transaction as revenue.

If the credit card issuer doesn't pay immediately, then instead of cash you could record an accounts receivable for the same amount ($3,395).