Question

Unit 7 Assesment - calculating merchant fees

This assessment addresses the following course objective(s):

Apply the accounting vocabulary

Record various business transactions in accordance with generally accepted accounting principles.

In this assignment, we will learn that credit cards charge merchants fees for transactions. We will understand how to calculate fees and make corresponding journal entries.

Lockey Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Oliver Bank Card, a 4% service charge for credit card sales is assessed The second credit card that Lockey accepts is the Cooper Card. Cooper assesses a 2.5% charge on sales for using its card. 8 Sold merchandise for $6,000 (that had cost $4,434) and accepted the customer's Olivers's Bank Card 12 Sold merchandise for $5,60D (that had cost $3,629) and accepted the customer's Cooper Card. Prepare joumal entries to record the above selected credit card transactions of Loceky Company (Round your answers to the nearest whole dollar amount.) No Date General Joumal Debit Credit II

Answer 1

Journal Entries:

No	Date	General Journal	Debit	Credit
1	Nov.8	Cash	$5,760
		Credit Card Expense [$6,000 x 4%]	$240
		Sales revenue		$6,000
		[To record credit card sales less a 4% credit card expense]
2	Nov.8	Cost of goods sold	$4,434
		Inventory		$4,434
		[To record cost of goods sold]
3	Nov.8	Cash	$5,460
		Credit Card Expense [$5,600 x 2.5%]	$140
		Sales revenue		$5,600
		[To record credit card sales less a 4% credit card expense]
4	Nov.8	Cost of goods sold	$3,629
		Inventory		$3,629
		[To record cost of goods sold]

*Assumed that Cash is received immediately on deposit.