Question

Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,800 (that had cost $6,503) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $6,000 (that had cost $3,888) 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 $8,448

Debit Finance Charge Expense $352

Credit Sales Revenue $8,800

To record the sale of goods.

Debit Cost of Goods Sold $6,503

Credit Inventory $6,503

To record the cost of goods sold.

April 12:

Debit Cash Account $5,850

Debit Finance Charge Expense $150

Credit Sales Revenue $6,000

To record the sale of goods.

Debit Cost of Goods Sold $3,888

Credit Inventory $3,888

To record the cost of goods sold.

Explanation:

a) Data and Calculations:

April 8 Sales Revenue = $8,800

Finance charges = 4% of $8,800 = $352

Cost of goods sold = $6,503

April 12 Sales Revenue = $6,000

Finance charges = 2.5% of $6,000 = $150

Cost of goods sold = $3,888