Sales Journal Entry Example:
Credit Card Transactions
(Perpetual Inventory System)

Q: Prepare journal entries for the following credit card sales transactions using the perpetual inventory system:

Sold $10,000 of merchandise, that costs $7,500, on MasterCard credit cards. The net cash receipts from sales are immediately deposited in the seller's bank account. MasterCard charges a 5% fee.

A: In this transaction you actually have 2 components. The first part is the sales of goods. The second part is the fee charged by Mastercard. We record each of these separately.

Here are the journal entries for each of these transactions:

Dr Bank..................$10,000
Cr Sales.............................$10,000

AND

Dr Cost of Sales..................$7,500
Cr Inventories.............................$7,500

The two journal entries above are only for the sales themselves.

Note how we adjust inventories (not "purchases") in the 2nd entry above as it is a perpetual inventory system. For more information on this entry see our full tutorial on perpetual and periodic inventory systems.

The credit card fees amount to 5%, so we take the sales (which were processed through a credit card machine or program) and multiply this by 5% to get the amount.

The entries are as follows:

Dr Fees..................$500
Cr Bank.............................$500

The credit card fees of $500 are calculated as $10,000 x 5% = $500.

Instead of the journal entries above we could also pass a compound entry (combined entry), as follows:

Dr Bank..................$9,500
Dr Fees......................$500
Cr Sales.............................$10,000

AND

Dr Cost of Sales..................$7,500
Cr Inventories.............................$7,500

All we are doing here is just doing one entry for bank ($9,500) instead of two entries (debit $10,000 and credit $500). Both ways of journalizing this transaction (as above) are totally valid.

As a final note bear in mind that the $10,000 of Mastercard sales above would probably have been made up of multiple sales on multiple days. In such a case each sale and the fee for each sale could be its own entry. However, one could also take the sales over a period of time, such as a month, and just pass one large batch entry at the end of the month for all sales and for all fees.

Anyway, that's how I would record the sales journal entry with credit card fees.

Best,
Michael Celender
Founder of Accounting Basics for Students


Related Questions & Tutorials:

• Full Tutorial: Sales, Cost of Goods Sold and Gross Profit
• Cash Sales Journal Entry Example

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