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Chapter 7: Q6SE (page 413)

Recording credit card and debit card sales

Restaurants do a large volume of business with credit and debit cards. Suppose Summer,

Sand, and Castles Resort restaurant had these transactions on January 28, 2018:

National Express credit card sales $ 10,800

ValueCard debit card sales 10,000

Requirements

1. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee anddeposits sales net of the fee. Journalize these sales transactions for the restaurant.

2. Suppose Summer, Sand, and Castles Resort’s processor charges a 2% fee anddeposits sales using the gross method. Journalize these sales transactions for therestaurant.

Short Answer

Expert verified

Bank account debited with $20,384.

Step by step solution

01

Definition of credit card

A credit card is a card that allows users to purchase goods on credit.

02

Using the net method

The net method is a method to record the revenue of the credit card sale in which total sale less prescribing fees equals cash.

Date

Particulars

Debit

Credit

1.

Bank

$20,384

Credit Card Expense

$416

Sales

$20,800

(To record credit card sales)

03

Using the gross method

The gross method is a method in which total sale is directly deposited within a few days. The amount to prescribed fees is deducted at the end of the month.

Date

Particulars

Debit

Credit

2.

Bank

$20,800

Sales

$20,800

(To record the credit card sales)

Credit Card Expenses

$416

Bank

$416

(Payment of credit card expenses)

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Most popular questions from this chapter

Match the accounting terminology to the definitions.

1. Sarbanes-Oxley Act

2. Internal control

3. Encryption

4. Separation of duties

5. Internal auditors

a. Organizational plan and all the related measures adopted by an entity to safeguard assets,

encourage employees to follow company policies, promote operational efficiency, and ensure

accurate and reliable accounting records.

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d. Requires companies to review internal control and take responsibility for the accuracy and

completeness of their financial reports.

e. Dividing responsibilities between two or more people.

Question: Understanding bank account controls

Answer the following questions about the controls in bank accounts:

Requirements

1. Which bank control protects against forgery?

2. Which bank control reports the activity in the customer’s account each period?

3. Which bank control confirms the amount of money put into the bank account?

What are some common controls used with a bank account?

What are two common methods used when accepting deposits for credit card and debit card transactions?

Applying internal control over cash payments by check

A purchasing agent for Franklin Office Supplies receives the goods that he purchases

and also approves payment for the goods.

Requirements

1. How could this purchasing agent cheat his company?

2. How could Franklin avoid this internal control weakness?
See all solutions

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