Question

Credit Card Sales The Kitchen Store accepts cash, personal checks, and two credit cards when customers buy merchandise. With the Great American Bank Card, The Kitchen Store receives an immediate deposit in its checking account when credit card sales slips are deposited at the bank. The bank charges a three percent fee. With the United Merchants Card, The Kitchen Store mails the credit card sales slips to United Merchants’ regional processing center each day. United Merchants accumulates these slips for three days and then mails a check to The Kitchen Store, after deducting a two percent fee. Prepare journal entries to record the following: a. Sales for March 15 were: Cash and checks $2,550 Great American Bank Card (Deposited at the end of the day) 3,300 United Merchants Card (Mailed at the end of the day) 2,100 $7,950 b. Received a check for $9,250 from United Merchants on March 20.

Answer 1

Solution

Required journal entries are as prepared below:

	Date	Description	Debit	Credit
a.	Mar-15	Cash (2,550+ 3,300*97%)	5,751
		Credit Card Fee Expense (3,300*3%)	99
		Account Receivable – United Merchants Card	2,100
		Sales Revenue		7,950
		(To record cash and credit card sales)
b.	Mar-20	Cash	9,250
		Account Receivable – United Merchants Card		9,250
		(To record receipt of check from United Merchants)

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