Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $5,600 (that had cost $3,500) 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.

Question

Business

Zain Ashley

27 April, 19:01

Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $8,400 (that had cost $6,000) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $5,600 (that had cost $3,500) 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.

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Answers (1)

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Milton Massey · Answer 1

The journal entries are in the explanation.

Explanation:

8 - Sold merchandise and accepted the customer's Suntrust Bank Card.

(Debit) Cash 8,064 (8,400 X 0.96 = 8,064)

(Debit) Credit card expense 336 (8,400 X 0.04=336)

(Credit) Sales 8,400

(Debit) Costs of goods sold 6,000

(Credit) Merchandise inventory 6,000

12 - Sold merchandise and accepted the customer's Continental Card.

(Debit) Cash 5,460 (5,600 X 0.975=5,460)

(Debit) Credit card expense 140 (5,600 X 0.025=140)

(Credit) Sales 5,600

(Debit) Costs of goods sold 3,500

(Credit) Merchandise inventory 3,500