Krazy Hair Salon accepts its own credit card, as well as debit cards and bank and nonbank credit cards. Krazy is charged 3.5% for all bank credit card transactions, 4.25% for all nonbank credit card transactions, and $0.50 per transaction for all debit card transactions. In October and November 2014, the following summary transactions occurred:
Oct. 15 Performed services totalling $15,000 for customers who used Krazy credit cards.
20 Performed services totalling $7,500 for customers who used Visa credit cards.
30 Performed services totalling $2,000 for customers who used nonbank credit cards.
31 Performed services totalling $5,000 for customers who used debit cards (100 transactions).
Nov. 15 Collected $9,000 on Krazy credit cards.
18 Collected the amount owing from the nonbank credit card companies for the October 30 transactions.
30 Added interest charges of 24% to outstanding Krazy credit card balances. Interest is charged after 30 days from date of purchase.
Instructions
(a) Record the above transactions for Krazy Hair Salon.
(b) In addition to these transactions, Krazy Hair Salon had rent expense of $4,000, supplies expense of $500, and salary expense of $5,000 for the months of October and November. Prepare a multi-step income statement for Krazy Hair Salon for the two months ended November 30.