Newland Retailers accepted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Newland Retailers will include a credit to Sales Revenue of $90,000 and a debit(s) to

Question

Quizplus · Accepted Answer

The entry to record credit card sales includes a credit to Sales Revenue for the total amount of the sale, in this case, $90,000. Since Citibank charges a 4% service charge for its credit card use, the debit entry must include two accounts: Cash for the net deposit amount of $86,400 ($90,000 - $3,600) and Service Charge Expense for the amount of $3,600. Therefore, the correct entry is:

Debit: Cash $86,400
Debit: Service Charge Expense $3,600
Credit: Sales Revenue $90,000

Newland Retailers Accepted $90,000 of Citibank Visa Credit Card Charges