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. Apr. 8 Sold merchandise for $7,400 (that had cost $5,469) and accepted the customer's Suntrust Bank Card. 12 Sold merchandise for $7,800 (that had cost $5,054) and accepted the customer's Continental Card. Prepare journal entries to record the above selected credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

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Business

Seamus

26 August, 17:41

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. Apr. 8 Sold merchandise for $7,400 (that had cost $5,469) and accepted the customer's Suntrust Bank Card. 12 Sold merchandise for $7,800 (that had cost $5,054) and accepted the customer's Continental Card. Prepare journal entries to record the above selected credit card transactions of Levine Company. (Round your answers to the nearest whole dollar amount.)

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Casey Cruz · Answer 1

The journal entries are shown below:

1. Cash A/c Dr $7,104

Credit card expense A/c Dr $296 ($7,400 * 4%)

To Sales revenue A/c $7,400

(Being cash is received)

Cost of goods sold A/c Dr $5,469

To Merchandise inventory A/c $5,469

(Being inventory is sold at cost)

2. Accounts receivable A/c Dr $7,488

Credit card expense A/c Dr $312 ($7,800 * 4%)

To Sales revenue A/c $7,800

(Being merchandise is sold on credit)

Cost of goods sold A/c Dr $5,054

To Merchandise inventory A/c $5,054

(Being inventory is sold at cost)

Cash A/c Dr $7,488

To Accounts receivable $7,488

(Being cash is received)