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

Answer:

See the explanation below:

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