Question

Brinker accepts all major bank credit cards, including First Savings Bank's, which assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in First Savings Bank Card credit sales. What entry should Brinker make on May 26 to record the deposit?

Answer 1

To record the deposit of $4,800 in First Savings Bank Card credit sales, Brinker should make the appropriate entries on May 26: debiting Accounts Receivable, crediting Sales Revenue and Service Charge Expense, and crediting Cash for the deposit amount.

Step-by-step explanation:

To record the deposit of $4,800 in First Savings Bank Card credit sales, Brinker should make the following entry on May 26:

1. Debit: Accounts Receivable - First Savings Bank Card
2. Credit: Sales Revenue - First Savings Bank Card (2.5% of $4,800)
3. Credit: Service Charge Expense - First Savings Bank Card (2.5% of $4,800)
4. Credit: Cash (Deposit amount = $4,800 - Service Charge)

The entry ensures that the revenue from the credit sales is recorded correctly, the service charge is accounted for, and the remaining funds are recorded as cash deposited in the bank.

Answer 2

Step-by-step explanation:

The journal entry is shown below:

Cash A/c Dr $4,680

Credit card expenses A/c Dr $120 ($4,800 × 2.5%)

To Sales $4,800

(Being the deposit is recorded and the remaining balance is debited to the cash account)

We debited the cash and the credit card expenses account and credited the sales account so that proper entry would be recorded.