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

Solution:

Sales Related Transactions Including the Use of Credit Cards:

Journal Entries:

Transaction	Account Titles and Explanation	Debit	Credit
a.	Cash	$25,000
	Sales		$25,000
	(To record cash sales)
	Cost of Goods Sold	$17,500
	Merchandise Inventory		$17,500
	(To record cost of goods sold)
b.	Accounts Receivable	$98,000
	Sales		$98,000
	(To record sales made on account)
	Cost of Goods Sold	$58,800
	Merchandise Inventory		$58,800
	(To record cost of goods sold)
c.	Cash	$475,000
	Sales		$475,000
	(To record sales to customers who use credit cards)
	Cost of Goods Sold	$280,000
	Merchandise Inventory		$280,000
	(To record cost of goods sold)
d.	Cash	$63,000
	Sales		$63,000
	(To record sales made to customers who used American Express)
	Cost of Goods Sold	$39,000
	Merchandise Inventory		$39,000
	(To record cost of goods sold)
e.	Credit Card Expense	$13,450
	Cash		$13,450
	(To record service fee for processing credit card sales)