Question

Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,600 (that had cost $6,355) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $8,200 (that had cost $5,314) and accepted the customer's Continental Card. Continental charges a 2.5% fee. Prepare journal entries to record the above credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

Answer 1

Answer:

Apr.8

Dr Account Receivable - Suntrust Bank    $8,256

Dr Credit card expenses                            $344

Cr Sales                                                       $8,600

(to record sales, payment through credit card issued by Suntrust Bank)

Apr.12

Dr Account Receivable - Continental Card    $7,995

Dr Credit card expenses                                  $205

Cr Sales                                                            $8,200

(to record sales, payment through credit card issued by Continental Card)

Explanation:

The credit card expenses of the two transaction is calculated as: Sales proceed x % of fee

Thus, the sales made in 8 Apr has the credit card expenses of 8,600 x 4% =$344.

The sales made in 12 Apr has the credit card expenses of 8,200 x 2.5% =$205.