Jeff Retailers accepted $75,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 2% for its credit card use. The entry to record this transaction by Jeff Retailers will include a credit to Sales Revenue of $75,000 and a debit(s) to

Question

Quizplus · Accepted Answer

When a credit card is used, the retailer will receive the amount charged minus the fee charged by the credit card company. In this case, the retailer received $75,000, but Citibank charges a 2% fee for using their credit card.

Therefore, the retailer would receive $75,000 - ($75,000 x 2%) = $73,500.

The entry to record this transaction would include a credit to Sales Revenue of $75,000 and a debit to Cash of $73,500 (the actual amount received) and a debit to Service Charge Expense of $1,500 (the amount charged by Citibank for using their credit card).

Therefore, the best choice is A, which includes both the debit to Cash and the debit to Service Charge Expense.

Jeff Retailers Accepted $75,000 of Citibank Visa Credit Card Charges