Brinker accepts all major bank credit cards,including First Savings Bank's,which assesses a 2.5% charge on sales for using its card.On May 26,Brinker had $4,800 in First Savings Bank Card credit sales.What entry should Brinker make on May 26 to record the deposit?
A)Debit Accounts Receivable $4,800;credit Sales $4,800.
B)Debit Cash $4,680;debit Credit Card Expense $120;credit Sales $4,800.
C)Debit Cash $4,800;credit Sales $4,800.
D)Debit Cash $4,920;credit Credit Card Expense $120;credit Sales $4,800.
E)Debit Accounts Receivable $4,680;debit Credit Card Expense $120;credit Sales $4,800.

Question

Quizplus · Accepted Answer

Since First Savings Bank imposes a 2.5% charge on credit sales made through its card, Brinker will only receive 97.5% of the sales ($4,800 x 0.975 = $4,680). Therefore, Brinker should debit Cash for $4,680 and debit Credit Card Expense for $120 (2.5% of $4,800). The total debits of $4,800 should then be credited to Sales.

Brinker Accepts All Major Bank Credit Cards,including First Savings Bank's,which