Question

Unmatched Elegance 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 2 percent fee. American Express charges a 3 percent fee. Unmatched Elegance Gift Shop also grants trade discounts to certain wholesale customers who place large orders. These orders are not subject to sales tax. During February 2016, Unmatched Elegance Gift Shop engaged in the following transactions:
DATE TRANSACTIONS
2016
Feb. 1 Sold crystal goods to Beautiful Kitchens, a wholesale customer. The list price is $5,000, 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 $9,500 plus sales tax of $760.
15 Recorded sales for the period from February 1 to February 15 to customers using bank credit cards of $13,000 plus sales tax of $1,040. (Record the 2 percent credit card expense at this time.)
16 Received a check from Beautiful Kitchens in payment of Invoice 5950 dated February 1.
16 Sold merchandise to customers using American Express for $9,000 plus sales tax of $720.
17 Sold a set of Roman statues to Incredible Bedrooms, a wholesale customer. The list price is $9,000, 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 amount billed on February 16, less a 3 percent credit card expense.
27 Received a check from Incredible Bedrooms in payment of Invoice 5951 dated February 17.
28 Recorded cash sales for the period from February 16 to February 28 of $7,750 plus sales tax of $620.
28 Recorded sales for the period from February 16 to February 28 to customers using bank credit cards of $15,000 plus sales tax of $1,200. (Record the 2 percent credit card expense at this time.)
28 Sold merchandise to customers using American Express for $10,200 plus sales tax of $816.

INSTRUCTIONS
1. Open the general ledger accounts indicated below and enter the balances as of February 1, 2016.
2. Record the transactions in a general journal. Use 10 as the journal page number.
3. Post the entries from the general journal to the appropriate accounts in the general ledger.
GENERAL LEDGER ACCOUNTS
101 Cash, $23,230 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?



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  • CreatedAugust 08, 2014
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