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Credit Card Sales Ruth Anne’s Fabrics accepts cash, personal checks, and two credit cards when customers buy merchandise. With the Great American Bank Card, Ruth Anne’s Fabrics receives an immediate deposit in its checking account when credit card sales slips are deposited at the bank. The bank charges a 4% fee. With the United Merchants Card, Ruth Anne’s Fabrics mails the credit card sales slips to United Merchants’ regional processing center each day. United Merchants accumulates these slips for three days and then mails a check to Ruth Anne’s Fabrics, after deducting a 3% fee. Prepare journal entries to record the following:
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Round to the nearest dollar.
| a. | Sales for March 15 were as follows: | |
| Cash and checks | $1,650 | |
| Great American Bank Card (Deposited at the end of the day) | 2,000 | |
| United Merchants Card (Mailed at the end of the day) | 1,500 | |
| $5,150 | ||
| b. | Received a check from United Merchants on March 20 for: | $5,888 |
a.
| General Journal | |||
|---|---|---|---|
| Date | Description | Debit | Credit |
| Mar.15 | Cash | $AnswerIncorrect 0.00 points out of 1.00 |
$AnswerCorrect 1.00 points out of 1.00 |
| AnswerCashAccounts Receivable – United MerchantsCredit Card Fee ExpenseSales RevenueCorrect 1.00 points out of 1.00 |
AnswerIncorrect 0.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
|
| Credit Card Fee Expense | AnswerCorrect 1.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
|
| AnswerCashAccounts Receivable – United MerchantsCredit Card Fee ExpenseSales RevenueCorrect 1.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
|
| To record cash and credit card sales. | |||
b.
| General Journal | |||
|---|---|---|---|
| Date | Description | Debit | Credit |
| Mar.20 | AnswerCashAccounts Receivable – United MerchantsCredit Card Fee ExpenseSales RevenueCorrect 1.00 points out of 1.00 |
$AnswerCorrect 1.00 points out of 1.00 |
$AnswerCorrect 1.00 points out of 1.00 |
| AnswerCashAccounts Receivable – United MerchantsCredit Card Fee ExpenseSales RevenueCorrect 1.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
AnswerCorrect 1.00 points out of 1.00 |
|
| To record receipt of check from United Merchants. | |||
Expert Answer
Required journal entries are as prepared below:
| Date | Description | Post ref. | Debit | Credit | |
| a. | Mar-15 | Cash (1,650+ 2,000*96%) | 3,570 | ||
| Credit Card Fee Expense (2,000*4%) | 80 | ||||
| Account Receivable – United Merchants Card | 1,500 | ||||
| Sales Revenue | 5,150 | ||||
| (To record cash and credit card sales) | |||||
| b. | Mar-20 | Cash | 5,888 | ||
| Account Receivable – United Merchants Card | 5,888 | ||||
| (To record receipt of check from United Merchants) |
