Question

Jervis accepts all major bank credit cards, including those issued by Northern Bank (NB), which assesses a 4.5% charge on sales for using its card. On June 28, Jervis had $5,800 in NB Card credit sales. What entry should Jervis make on June 28 to record the deposit?

Answer 1

Answer:

The journal entry to be recorded by Jervis on June 28 is shown below:

Explanation:

The journal entry to be recorded by Jervis on June 28 is as:

On June 28

Cash A/c......................................Dr  $5,539

Credit Card expense A/c........Dr $ 261

                Sales A/c............................Cr  $5,800

Being record the deposit of amount on Sales by Jervis

As the amount is deposited on sale which means cash is coming into the bank, and any increase in cash is debited. So, the cash account is debited. And on the amount expense is charges, the charge is also debited. Therefore, the credit card expense is debited. And the sales is made, so, the sales account is credited.

Working Note:

Credit card expense = Sales amount × Charge

= $5,800  × 4.5%

= $261