Question

If you paid for the candy bar with a credit card, how would the transaction appear. What would be debited and what would be credited from the point of view of the buyer and the seller?

Answer 1

If we pay for the candy bar through credit card,

FOR BUYER

the following entry would take place:

Candybar a/c......Dr. xxxx

TO Credit Card (Bank ) a/c. xxxx

(Being purchased candy bar through Credit card)

Here in the books of Buyer the credit card is treated as a mode of payment under bank a/c, which is classified under short-term loans.

As the payments through credit card increases, the liabilty increases.

When the Credit card bill is paid, then Credit Card a/c gets debited and bank account or cash account gets credited.

Also since candy bar is purchased, it would be debited.

FOR SELLER

Since the seller selling candy bar, it would be treated as a sale, and sales are income, which are credited.

As the seller receiving money through credit card from buyer, the seller's bank account would be debited at the point of sale.

therefore the following entry would take place in the books of seller.

Bank a/c.........Dr. xxxx

TO Candybar (sales) a/c. xxxx

(Being Sale of Candy bar made and money received through Swiping machine (bank a/c).