Question

A customer purchased a $2,000 item at appliance world, paying with a credit card. appliance world is charged a 2% fee by the credit card company. when recording this sale, appliance world would:

Answer 1

They will make an entry that is a debit to Cash and Credit Card Expense and a credit to Sales.

The first step is to calculate how much the credit card expense will be. $2,000 x .02 = $40.

Knowing that the credit card expense is $40, Appliance World will record an entry that is a debit to Cash for $1,960, a debit to Credit Card Expense for $40 and a credit to Sales for $2,000.