# Journal Entry for Credit Card Sales Transaction

Q: Prepare the journal entries for the following credit card sales transactions (the company uses the perpetual inventory system):

Sold \$3,000 of merchandise with a cost of \$1,500, on an assortment of credit cards. Net cash receipts are received 7 days later, and a 4% fee is charged.

A:
I would do the following journal entries for these transactions:

Dr Debtors.................\$3,000
Cr Sales......................\$3,000

Dr Cost of Good Sold.......\$1,500
Cr Inventory......................\$1,500
Credit sale of inventory worth \$3,000

Because it is a
perpetual system, where we keep perpetual (continuous) records of inventory, we always adjust the inventory account (we don't have a purchases account).

7 days later I would do the following entries:

Dr Fee.................\$120
Cr Debtors................\$120
Fee of 4% of \$3,000.

Dr Bank................\$2,880
Cr Debtors..................\$2,880
Received \$2,880 from credit card company (\$3,000 - \$120)

As you can see the debtors' balance is reduced by the 4% fee (\$3,000 X 0.04 = \$120). The remaining balance is \$2,880 (\$3,000 - \$120).

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