Exercise 7-2 Accounting for credit card sales Levine Company uses the perpetual

Question

Exercise 7-2 Accounting for credit card sales 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. Prepare journal entries to record the following selected credit card transactions of Levine Company Apr. 8 Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer's Suntrust Bank Card 12 Sold merchandise for $5,600 (that had cost $3,500) and accepted the customer's Continental Card.

Explanation / Answer

Journal Entries: DATE ACCOUNTS TITLE AND EXPLANATIONS DEBIT $ CREDIT $ 8-Apr Cash Account Dr. 8064 Credit card Service Expense Dr. 336       Sales revenue 8400 (for sales made and card expense debited @4%) Cost of Goods sold Dr. 6000      Merchandise Inventory 6000 12-Apr Cash Account Dr. 5460 Credit card Service Expense Dr. 140       Sales revenue 5600 (for sales made and card expense debited @2.5%) Cost of Goods sold Dr. 3500      Merchandise Inventory 3500

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