Exercise 7-2 Accounting for credit card sales LO C1 Levine Company uses the perpetual inventory system. Apr. 8 Sold merchandise for $4,500 (that had cost $3,326) and accepted the customer's Suntrust Bank Card. Suntrust charges a 4% fee. 12 Sold merchandise for $4,600 (that had cost $2,981) 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.)

See the journal entries below.

Explanation:

We first calculate the following:

Suntrust Credit Card expenses = $4,500 * 4% = $180

Continental Credit Card expenses = $4,600 * 2.5% = $115

The journal entries will therefore look as follows:

Levine Company

Journal Entries

Date       General Journal                                     Debit ($)         Credit ($)  

Apr. 8     Cash (Suntrust Credit Card)                    4,320

              Credit Card Expense                                   180

                 Sales Revenue                                                              4,500

               (To record sale of goods using Suntrust Credit Card at 4% fee.)  

              Cost of Goods Sold                                  3,326

                  Merchandise Inventory                                                 3,326

                (To record the cost of goods sold.)                                                

Apr. 12    Cash (Continental Credit Card)              4,485

                Credit Card Expense                                  115

                  Sales Revenue                                                               4,600

               (To record sale of goods using Continental credit card at 2.5% fee.)

                Cost of Goods Sold                               2,981

                    Merchandise Inventory                                               2,981

                (To record the cost of goods sold.)