Question

Kenai Company sold $600 of merchandise to a customer who used a National Bank credit card. National Bank deducts a 3% service charge for sales on its credit cards. Kenai electronically remits the credit card sales receipts to the credit card company and receives payment immediately. The journal entry to record the collection from the credit card company would be:________
a. Debit Accounts Receivable-National $582; debit Credit Card Expense $18 and credit Sales $600.
b. Debit Cash $582 and credit Sales $582.
c. Debit Cash of $618 and credit Accounts Receivable-National $618.
d. Debit Cash of $618; credit Credit Card Expense $18 and credit Sales $600.
e. Debit Cash $582; debit Credit Card Expense $18 and credit Sales $600.

Answer 1

Answer: E. Debit Cash $582; debit Credit Card Expense $18 and credit Sales $600.

Explanation:

Based on the scenario in the question as we are informed that Kenai Company sold $600 of merchandise to a customer who used a National Bank credit card and that National Bank deducts a 3% service charge for sales on its credit cards.

The journal entry to record the collection from the credit card company would be:

Dr Cash $582

Dr Credit card expense = 3% × $600 = 0.03 × $600 = $18

Cr Sales $600

Therefore, he correct option is E.