Q6SE - Horngren'S Financial And Managerial Accounting

Question

Recording credit card and debit card sales

Restaurants do a large volume of business with credit and debit cards. Suppose Summer,

Sand, and Castles Resort restaurant had these transactions on January 28, 2018:

National Express credit card sales $ 10,800

ValueCard debit card sales 10,000

Requirements

1. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee and deposits sales net of the fee. Journalize these sales transactions for the restaurant.

2. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee and deposits sales using the gross method. Journalize these sales transactions for the restaurant.

Step-by-Step Solution

Answer

Bank account debited with $20,384.

Step 1: Definition of credit card

A credit card is a card that allows users to purchase goods on credit.

Step 2: Using the net method

The net method is a method to record the revenue of the credit card sale in which total sale less prescribing fees equals cash.

Date	Particulars	Debit	Credit
1.	Bank	$20,384
	Credit Card Expense	$416
	Sales		$20,800
	(To record credit card sales)

Step 3: Using the gross method

The gross method is a method in which total sale is directly deposited within a few days. The amount to prescribed fees is deducted at the end of the month.

Date	Particulars	Debit	Credit
2.	Bank	$20,800
	Sales		$20,800
	(To record the credit card sales)
	Credit Card Expenses	$416
	Bank		$416
	(Payment of credit card expenses)