Hankco accepts all major bank credit cards, including Omni Bank's, which assesses a 4% charge on sales for using its card. On June 28, Hankco had $3,500 in Omni Card credit sales. What entry should Hankco make on June 28 to record the deposit?

Question

Quizplus · Accepted Answer

Hankco should recognize the cash received net of the credit card fee. The 4% fee on $3,500 is $140, so they receive $3,360 ($3,500 - $140). They debit Cash for the amount received, debit Credit Card Expense for the fee, and credit Sales for the total sales amount.

Hankco Accepts All Major Bank Credit Cards, Including Omni Bank's