Question

evine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $4,500 (that had cost $3,326) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $4,600 (that had cost $2,981) and accepted the customer's Continental Card. Continental charges a 2.5% fee. Prepare journal entries to record the above credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

Answer 1

Answer:

Levine Company

Journal Entries:

April 8:

Debit Cash Account (Suntrust Credit Card) $4,320

Debit Credit Card Expense $180

Credit Sales Revenue $4,500

To record the sale of goods via Suntrust Credit Card and the 4% fee.

Debit Cost of Goods Sold $3,326

Credit Inventory $3,326

To record the cost of goods sold.

April 12:

Debit Continental Credit Card $4,485

Debit Credit Card Expense $115

Credit Sales Revenue $4,600

To record the sale of goods via credit card and the 2.5% fee.

Debit Cost of Goods Sold $2,981

Credit Inventory $2,981

To record the cost of goods sold.

Explanation:

The journal entries record the sales transactions as they occur.  Cash is debited with the net amount received after deducting the credit card expenses, while the sales revenue account is credited with the full value of the sales transaction.  Since Levine Company uses the perpetual inventory system, the transactions are debited to the cost of goods sold and credited to the inventory account for the costs.