A retailer has 4% credit/debit card service fees deducted from the proceeds from each sale. The retailer has $1,200 in sales for the day. The journal entry to record these sales would be:

Question

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Since the retailer has 4% credit/debit card service fees deducted from the proceeds from each sale, the actual cash received will be $1,152 ($1,200 - 4% of $1,200). The journal entry to record these sales should debit Cash for $1,152, debit Credit Card Expense for $48 (4% of $1,200), and credit Sales for $1,200. This way the actual cash received is accurately recorded, and the service fees are properly accounted for as an expense.

A Retailer Has 4% Credit/debit Card Service Fees Deducted from the Proceeds