Question

Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, a 4% service charge for credit card sales is assessed. The second credit card that Levine accepts is the Continental Card. Continental assesses a 2.5% charge on sales for using its card.

Apr.		8		Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer’s Suntrust Bank Card.
		12		Sold merchandise for $5,600 (that had cost $3,500) and accepted the customer’s Continental Card.

Prepare journal entries to record the above selected credit card transactions of Levine Company

Answer 1

Journal entry :
Date	Accounts titles and Explanation	Debit ($)	Credit ($)
Apr-08	Cash (8,400*96%)	8,064
	Credit card expense	336
	Sales revenue		8,400
	(To record sales)
	cost of goods sold	6,000
	Inventory		6,000
	(To record cost of goods sold)
Apr-12	Cash (5600*97.5%)	5,460
	Credit card expense	140
	Sales revenue		5,600
	(To record sales)
	cost of goods sold	3,500
	Inventory		3,500
	(To record cost of goods sold)