MacKenzie Company sold $300 of merchandise to a customer who used a Regional Bank credit card.Regional Bank deducts a 1.5% service charge for sales on its credit cards and credits MacKenzie's account immediately when sales are made.The journal entry to record this sale transaction would be:

A) Debit Cash of $300 and credit Sales $300.
B) Debit Cash of $300 and credit Accounts Receivable $300.
C) Debit Accounts Receivable $300 and credit Sales $300.
D) Debit Cash $295.50; debit Credit Card Expense $4.50 and credit Sales $300.
E) Debit Cash $295.50 and credit Sales $295.50.

Question

Ashley Richards · Accepted Answer

Final Answer : D, Explanation :  The sale amount of $300 is reduced by the 1.5% service charge ($300 x 1.5% = $4.50). Therefore, MacKenzie will receive only $295.50 ($300 - $4.50) in cash from the credit card transaction. MacKenzie should debit Cash for $295.50 (the amount received) and debit Credit Card Expense for $4.50 (the service charge). The full sale amount of $300 should be credited to Sales.

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