Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,600 (that had cost $6,355) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $8,200 (that had cost $5,314) and accepted the customer's Continental Card. Continental charges a 2.5% fee. Prepare journal entries to record the above credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

Question

Business

Tiara Good

22 June, 02:56

Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,600 (that had cost $6,355) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $8,200 (that had cost $5,314) and accepted the customer's Continental Card. Continental charges a 2.5% fee. Prepare journal entries to record the above credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

+1

Answers (1)

Know the Answer?

Julius Hodge · Answer 1

Apr. 8

Dr Account Receivable - Suntrust Bank $8,256

Dr Credit card expenses $344

Cr Sales $8,600

(to record sales, payment through credit card issued by Suntrust Bank)

Apr. 12

Dr Account Receivable - Continental Card $7,995

Dr Credit card expenses $205

Cr Sales $8,200

(to record sales, payment through credit card issued by Continental Card)

Explanation:

The credit card expenses of the two transaction is calculated as: Sales proceed x % of fee

Thus, the sales made in 8 Apr has the credit card expenses of 8,600 x 4% = $344.

The sales made in 12 Apr has the credit card expenses of 8,200 x 2.5% = $205.