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22 July, 08:25

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 $7,400 (that had cost $5,469) and accepted the customer's Suntrust Bank Card. 12 Sold merchandise for $7,800 (that had cost $5,054) and accepted the customer's Continental Card. Prepare journal entries to record the above selected credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

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  1. 22 July, 10:22
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    The journal entries are shown below:

    1. Cash A/c Dr $7,104

    Credit card expense A/c Dr $296 ($7,400 * 4%)

    To Sales revenue A/c $7,400

    (Being cash is received)

    Cost of goods sold A/c Dr $5,469

    To Merchandise inventory A/c $5,469

    (Being inventory is sold at cost)

    2. Accounts receivable A/c Dr $7,488

    Credit card expense A/c Dr $312 ($7,800 * 4%)

    To Sales revenue A/c $7,800

    (Being merchandise is sold on credit)

    Cost of goods sold A/c Dr $5,054

    To Merchandise inventory A/c $5,054

    (Being inventory is sold at cost)

    Cash A/c Dr $7,488

    To Accounts receivable $7,488

    (Being cash is received)
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