Question

Travel Inc. sells tickets for a Caribbean cruise to Carmel Company employees. The total cruise package costs Carmel $70,000 from Ship A way Cruise liner. Travel Inc. receives a commission of 6% of the total price. Travel Inc., therefore, remits $65,800 to Ship A way. Prepare the entry to record the revenue recognized by Travel Inc. on this transaction.

Answer 1

Step 1:

Computation of the journal entries of recording the revenue recognized by Travel Inc.

Given information

Total sales worth = $70,000

Rate of commission = 6%

Travel Inc sales revenue is $70,000*0.06 = $4,200

 

Step 2:

Travel Inc sales revenue Journal Entry would be

Cash ($70,000 X 6%)................................................................. 4,200

              Sales Revenue............................................................................ 4,200

Account Title	Debit	Credit
Cash	4,200
Sales Revenue		4,200