Answer:
a. Debit Bank for $77,600; Debit Sales discount for $2.400; and Credit Sales for $80,000.
a. Debit Bank for $80,000; and Credit Sales for $80,000.
Explanation:
a. Prepare journal entries to record the sales and the subsequent receipt of cash from the credit card company.
The journal entry will look as follows:
<u>Accounts Title Debit ($) Credit ($) </u>
Bank (97% * 80,000) 77,600
Sales discount (3% * 80,000) 2.400
Sales 80,000
<em><u>(To record sales paid for by the customer using American Express credit cards.)</u></em>
b. Do the same as requirement (a), but assume the credit cards used were VISA cards (a bank credit card).
Under this scenario, the sales are NOT subject to discount and the customer will 100% of the price.
The journal entry will therefore look as follows:
<u>Accounts Title Debit ($) Credit ($) </u>
Bank 80,000
Sales 80,000
<em><u>(To record sales paid for by the customer using VISA cards.) </u></em>
