Question

MacKenzie Company sold $180 of merchandise to a customer who used a Regional Bank credit card. Regional Bank deducts a 4% service charge for sales on its credit cards. MacKenzie electronically remits the credit card sales receipts to the credit card company and receives payment immediately. The journal entry to record this sale transaction would be

Answer 1

Answer:

DR Cash................................................ $172.8 0

DR Credit card expense.......................$7.2 0

CR Sales.................................................................... $180

Explanation:

The bank will deduct a service charge of 4% before remitting the money so;

Cash = 180 * ( 1 - 0.04)

= $172.80

Credit Card expense

= 180 - 172.80

= $7.20