Question

Royal Gift Shop sells cards, supplies, and various holiday greeting cards.Sales to retail customers are subjected to an 8 percent sales tax. The firm sells its merchandise for cash; to customers using bank credit cards, such as Master Card and Visa; and to customers using American Express.The bank credit cards charge a 1 percent fee. American Express charged a 2 percent fee. Royal Gift Shop also grants trades discounts to certain wholesale customers who place large orders.These orders are not subjected to sale tax. During February 2019, Royal Gift engaged in the following transactions.

Date Transactions

Feb 1 Sold crystal good to Lovely Kitchen, whole sale customers. The list price is $ 4,300 with a 25 percent trade discount. This sale is not subjected to a sales tax. Issued invoice 5950 with terms of n/15

15 Recorded cash sales for the period from February 1 to February 15 of $8,000 plus sales tax of $ 704

15 Recorded sales for the period from February 1 to February 15 to customers using bank credit cards of $ 12,300 plus sales tax of $ 984. (Record the 1 percent credit card expenses at this time.)

16 Receive a check from Lovely Kitchen in payment of Invoice 5950 dated February 1

16 Sold merchandise to customers using American Express for $8,300 plus sales tax of $ 664

17 Sold a set of Roman statues to Beautiful Bedroom, a wholesale customers. The list price is $ 8,300, with a 30 percent traded discount. The sales is not subjected to sale tax. Issued Invoice 5951 with terms of n/15

20 Received payment from American Express for the amount billed on February 16 less a 2 percent credit card expense

27 Received a check for Beautiful Rooms in payment of Invoice 5951 dated February 17

28 Recorded cash sales for the period from February 16 to February 28 of $ 7,400 plus sales tax of $ 592

28 Recorded sales for the period from February 16 to February 28 to customers using bank credit cards of $ 10,000 plus sales tax of $ 800 (Record the 1 percent credit card expenses at this time)

28 Sold merchandise to customers using American Express for $ 9,500 plus sales tax of $ 760

Required

Record the transactions in a General Journal

Post the entries from the General Journal to the appropriate accounts in the general ledgers.

General Ledger Accounts

101 Cash $ 22, 530 Dr

121 Accounts Receivable

222 Sale Tax Payable

401 Sale

521 Credit Card Expense

Analize

What was the total credit card expenses incurred in February?

General Journal

General Ledgers

Analyze

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11

Date	Account Title	Debit	Credit
Feb 1, 2019

Answer 1

In the books of Royal Gift Shop :

Date	Account Titles	Debit	Credit
		$	$
Feb 1	Accounts Receivable : Lovely Kitchen	3,225
	Sales		3,225
Feb 15	Cash	8,704
	Sales Tax Payable		704
	Sales		8,000
Feb 15	Cash	13,151.16
	Credit Card Expense	132.84
	Sales Tax Payable		984
	Sales		12,300
Feb 16	Cash	3,225
	Accounts Receivable : Lovely Kitchen		3,225
Feb 16	Accounts Receivable: American Express	8,784.72
	Credit Card Expense	179.28
	Sales Tax Payable		664
	Sales		8,300
Feb 17	Accounts Receivable : Beautiful Bedrooms	5,810
	Sales		5,810
Feb 20	Cash	8,784.72
	Accounts Receivable: American Express		8,784.72
Feb 27	Cash	5,810
	Accounts Receivable: Beautiful Bedrooms		5,810
Feb 28	Cash	7,992
	Sales Tax Payable		592
	Sales		7,400
Feb 28	Cash	10,692
	Credit Card Expense	108
	Sales Tax Payable		800
	Sales		10,000
Feb 28	Accounts Receivable : American Express	10,054.80
	Credit Card Expense	205.20
	Sales Tax Payable		760
	Sales		9,500

Total credit card expense in February : $ 625.32