Calco accepts all major bank credit cards, including First Bank's, which assesses a 3.5% charge on sales for using its card. On May 25, Calco had $4,800 in First Bank Card credit sales. What entry should Calco make on May 25 to record the deposit?

Question

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Calco needs to record the credit card expense of 3.5% charged by First Bank's card. The actual amount that Calco will receive after deducting the expenses will be $4,632 ($4,800 - $168). Therefore, Calco should debit Cash for $4,632 and Credit Card Expense for $168 (both debited as expenses) and credit Sales for $4,800. This will ensure that the accounts are accurately recorded.

Calco Accepts All Major Bank Credit Cards, Including First Bank's