Q19E - Horngren'S Financial And Managerial Accounting

Question

Journalizing credit card sales 2018

Sep. 1 Recorded National Express credit card sales for \(96,000, net of processor fee of 1%. Ignore Cost of Goods Sold.

15 Recorded ValueMax credit card sales of \)80,000. Processor charges a 1.5% fee. ValueMax charges the fee at the end of the month, therefore Marathon uses the gross method for these credit card sales. Ignore Cost of Goods Sold.

30 ValueMax collected the fees for the month of September. Assume the

September 15 transaction is the only ValueMax credit card sale. Journalize all entries required for Marathon Running Shoes.

 

Step-by-Step Solution

Answer

The credit card expense is $960.

Step-by-Step Solution Step 1: Definition of credit card

A credit card is a particular type of card that facilities customers to buy goods on credit.

Step 2: Journal entries for credit card sale

Date	Particulars	Debit	Credit
2018
September 1	Cash	$95,040
	Credit Card Expense	$960
	Sales Revenue		$96,000
	(Being entry of the credit card sale)
September 15	Cash	$96,000
	Sales Revenue		$96,000
	(Being entry of the credit card sale)
September 30	Credit Card Expense	$960
	Cash		$960
	(Being entry for the payment of processing fee)