Question

Exerclse 7-2 Accounting for credit card sales LO C1 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 $8,48 (that had cost $6,8) and accepted the customer's Suntrust Bank Card 12 Sold merchandise for $5,688 (that had cost $3,580) and accepted the customer's Continental Card Prepare journal entries to record the above selected credit card transactions of Levine Company. View transaction list View journal entry worksheet No Date Debit Credit Apr 08 Cash 8,064 Credit card expense Sales 8,400 Apr 08 Cost of goods sold 6,000 6,000 Apr 12 5,480 Credit card expense 140 Sales 5,600 Apr 12 Cost of goods sold 3,500 3,500

It said april 12 Accounts recievable- continental was wrong.

Answer 1

April 12 Accounts recievable- continental is correct
Accounts recievable- continental = sales (5600) - credit card exp.(5600 x 2.5%=140) = $5460
Is Continental credit card charges = 25% or 2.5% ,
if it 2.5% than 5460 Account receivables are correct.
and if it is 25% than Accounts recievable- continental = sales (5600) - credit card exp.(5600 x 25%=1400) = $4200