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.)

Question

Kaya Baldwin

Business

16 November, 05:39

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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Moon · 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)