Question

Sales-Related Transactions, Including the Use of Credit Cards

Journalize the entries for the following transactions:

a. Sold merchandise for cash, $25,000. The cost of the goods sold was $17,500. (Record the sale first.)

b. Sold merchandise on account, $98,000. The cost of the goods sold was $58,800. (Record the sale first.)

c. Sold merchandise to customers who used MasterCard and VISA, $475,000. The cost of the goods sold was $280,000. (Record the sale first.)

d. Sold merchandise to customers who used American Express, $63,000. The cost of the goods sold was $39,000. (Record the sale first.)

e. Received and paid an invoice from National Clearing House Credit Co. for $13,450, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

Answer 1

a. Sold merchandise for cash, $25,000. The cost of the goods sold was $17,500.

Account Titles and Explanation	Debit	Credit
Cash A/c	25,000
To Sales A/c		25,000
[Entry to record the sale]
Cost of Merchandise Sold A/c	17,500
To Merchandise Inventory A/c		17,500
[Entry to record the cost of goods sold]

b. Sold merchandise on account, $98,000. The cost of the goods sold was $58,800.

Account Titles and Explanation	Debit	Credit
Accounts Receivable A/c	98,000
To Sales A/c		98,000
[Entry to record the sale]
Cost of Merchandise Sold A/c	58,800
To Merchandise Inventory A/c		58,800
[Entry to record the cost of goods sold]

c. Sold merchandise to customers who used MasterCard and VISA, $475,000. The cost of the goods sold was $280,000.

Account Titles and Explanation	Debit	Credit
Cash A/c	475,000
To Sales A/c		475,000
[Entry to record the sale]
Cost of Merchandise Sold A/c	280,000
To Merchandise Inventory A/c		280,000
[Entry to record the cost of goods sold]

d. Sold merchandise to customers who used American Express, $63,000. The cost of the goods sold was $39,000.

Account Titles and Explanation	Debit	Credit
Cash A/c	63,000
To Sales A/c		63,000
[Entry to record the sale]
Cost of Merchandise Sold A/c	39,000
To Merchandise Inventory A/c		39,000
[Entry to record the cost of goods sold]

e. Received and paid an invoice from National Clearing House Credit Co. for $13,450, representing a service fee paid for processing MasterCard, VISA, and American Express sales.

Account Titles and Explanation	Debit	Credit
Credit Card Expenses A/c	13,450
To Cash A/c		13,450
[Entry to record the payment of service fee for processing MasterCard, VISA, and American Express sales]