Royal Gift Shop sells cards, supplies, and various holiday greeting cards. Sales to retail customers are subject to an 8 percent sales tax The firm sells its merchandise for cash; to customers using bank credit cards, such as MasterCard and Visa; and to customers using American Express. The bank credit cards charge a 1 percent fee. American Express charges a 2 percent fee. Royal Gift Shop also grants trade discounts to certain wholesale customers who place large orders. These orders are not subject to sales tax. During February 2019, Royal Gift Shop engaged in the following transactions DATE TRANSACTIONS
2019
Feb. 1 Sold crystal goods to Lovely Kitchens, a wholesale customer. The list price is $3,700, with a 30 percent trade discount. This sale is not subject to sales tax. Issued Invoice 5950 with terms of n/15.
15 Recorded cash sales for the period from February 1 to February 15 of $8,200 plus sales tax of $656
15 Recorded sales for the period from February 1 to February 15 to customers using bank credit cards of $11,700 plus sales tax of $936 (Record the 1 percent credit card expense at this time.)
16 Received a check from Lovely Kitchens in payment of Invoice 5950 dated
16 Sold merchandise to customers using American Express for $7,700 plus
17 Sold a set of Roman statues to Beautiful Bedrooms, a wholesale February 1. sales tax of $616. customer. The list price is $7,700, with a 20 percent trade discount. This sale is not subject to sales tax. Issued Invoice 5951 with terms of n/15
20 Received payment from American Express for the amount billed on
27 Received a check from Beautiful Bedrooms in payment of Invoice 5951
28 Recorded cash sales for the period from February 16 to February 28 of 28 Recorded sales for the period from February 16 to February 28 to February 16, less a 2 percent credit card expense. dated February 17. $7,100 plus sales tax of $568 customers using bank credit cards of $15,000 plus sales tax of $1,200. (Record the 1 percent credit card expense at this time.)
28 Sold merchandise to customers using American Express for $8,900 plus sales tax of $712.
Required:
2. Record the transactions in a general journal
3. Post the entries from the general journal to the appropriate accounts in the general ledger
GENERAL LEDGER ACCOUNTS
101 Cash, $21,930 Dr 401 Sales
121 Accounts Receivable 521 Credit Card Expense
222 Sales Tax Payable
Analyze:
What was the total credit card expense incurred in February?