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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Accounting for Credit Card Sales

Jarrod’s Meat Shop doubles as a butcher shop and a sandwich shop that sells to both individuals and a nearby hospital system. On a particular day, Jarrod’s had cash sales of $450, credit sales of $600, sales on MasterCard of $657, and sales on Visa of $923. The sales on credit cards incur merchant charges of 1.6% for MasterCard and 1.9% for Visa.

Required:

Prepare a journal entry to record these sales.

To determine

Credit Cards:

The credit cards are the form of factors that collects money instantly in an electronic mode. Credit cards are a type of cards issued by the banks to the customers for paying to seller instantly and securely.

To calculate:

The journal entry for recording sales from credit card.

Explanation

The sale through MasterCard is of $657 and through visa card is of $923. The charges for master card and visa card are 1.6% and 1.9% respectively. Cash sales and credit sales are $450 and $600. This is given in the question.

The journal entry for Bolton is as follows:

Date Particulars Debit ($) Credit ($)
Accounts Receivable……………………Cash……………………………………Service revenue………………….(Record the cash and credit sales)Cash    ($657×98.4%) …………….…………Service charge on MasterCard    ($657×1

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