daniel, inc., a retailer, accepts payment through credit cards. during july, credit card sales amounted to…

daniel, inc., a retailer, accepts payment through credit cards. during july, credit card sales amounted to $10,000. the processor charges a 2% fee. what is the correct journal entry or entries for credit card sales assuming the gross method?\na\naccounts\ndebit\ncredit\naccounts receivable\n10,000\nsales revenue\n10,000\ncredit card expense\n200\ncash\n200\nb\naccounts\ndebit\ncredit\naccounts receivable\n10,020\ncredit card expense\n200\nsales revenue\n10,000\nc\naccounts\ndebit\ncredit\ncash\n10,020\nsales revenue\n10,000\ncredit card expense\n200\ncash\n200\nd\naccounts\ndebit\ncredit\ncash\n10,020\ncredit card expense\n200

daniel, inc., a retailer, accepts payment through credit cards. during july, credit card sales amounted to $10,000. the processor charges a 2% fee. what is the correct journal entry or entries for credit card sales assuming the gross method?\na\naccounts\ndebit\ncredit\naccounts receivable\n10,000\nsales revenue\n10,000\ncredit card expense\n200\ncash\n200\nb\naccounts\ndebit\ncredit\naccounts receivable\n10,020\ncredit card expense\n200\nsales revenue\n10,000\nc\naccounts\ndebit\ncredit\ncash\n10,020\nsales revenue\n10,000\ncredit card expense\n200\ncash\n200\nd\naccounts\ndebit\ncredit\ncash\n10,020\ncredit card expense\n200

Answer

Brief Explanations:

Under the gross method, when credit card sales occur, the company records the full amount of sales as revenue. The credit card expense (2% of $10,000 = $200) is recognized as an expense. Cash received is $10,000 - $200 = $9,800. But looking at the options, let's analyze each:

  • Option A: Incorrect as it has wrong accounts and no proper recognition of cash and expense relationship.
  • Option B: Incorrect account (Accounts Receivable is not used here as it's credit - card processed through a processor, not a trade receivable).
  • Option C: Incorrect format (double - entry for cash is wrong).
  • Option D: Cash is debited for the amount received ($10,000*(1 - 2%)=$9,800 is wrong in calculation here. Wait, no, wait the credit - card expense is $10,0002% = $200. But if we assume there is a typo in the options and we go by the principle: Cash is debited for the amount after expense, Credit Card Expense is debited for the fee, and Sales Revenue is credited for the full amount. But among the given options, if we assume the credit - card expense calculation is $10,0003% (maybe a misprint in the problem statement for the option values), no. Wait re - checking: The correct journal entry is: Debit Cash ($10,000*(1 - 2%)) = $9,800 (but if we assume the options have a misprint and we go by the structure. Wait no, another approach: When using the gross method for credit - card sales:
  • Sales Revenue is credited for the full amount of sales ($10,000).
  • Credit Card Expense (2% of $10,000 = $200) is debited.
  • Cash (amount received after expense) is debited. Looking at the options, if we assume in option D: Cash is $10,000 - $200 = $9,800 (but written as $10,620 which is wrong. Wait no, maybe it's a mis - transcription. Wait no, another way: The formula for the journal entry: Debit: Cash (amount after fee) and Credit Card Expense (fee amount) Credit: Sales Revenue (full sales amount) If we calculate Credit Card Expense = $10,0002%=$200, Cash = $10,000 - $200 = $9,800. But looking at the options, if we assume that in option D, it's a mis - write (maybe $9,800 as $10,620 is wrong. But among the given options, and if we consider the structure (debit Cash, debit Credit Card Expense, credit Sales Revenue), option D has Cash and Credit Card Expense as debits (but misses the credit to Sales Revenue). No, wait no, looking back: Wait the problem says "journal entry or entries". If it's a single entry: Debit Cash (amount after fee), Debit Credit Card Expense (fee), Credit Sales Revenue (full amount). None of the options A, B, C have the correct structure. But if we assume that in option D, it's a two - line entry (but the table is for one entry). Wait no, re - checking the options: Option A: Debit Accounts Receivable (wrong, as it's credit - card processed, not a trade receivable), Credit Sales Revenue (correct amount), Debit Credit Card Expense (correct amount), Credit Cash (wrong). Option B: Debit Accounts Receivable (wrong), Debit Credit Card Expense (correct amount), Credit Sales Revenue (correct amount). Option C: Debit Cash (wrong amount calculation if it's $10,000(1 + 2%) which is wrong principle), Credit Sales Revenue (correct amount), Debit Credit Card Expense (wrong), Credit Cash (wrong). Option D: Debit Cash (if we assume it's $10,000 - $200 = $9,800 but written as $10,620 which is wrong. But if we consider that the problem might have a typo and the intended answer is based on the principle (debit Cash (net of fee), debit Credit Card Expense (fee), credit Sales Revenue (gross)). But since option D has only two accounts (Cash and Credit Card Expense as debits, missing the credit to Sales Revenue). Wait no, re - looking at the options: Wait the original problem's options: Option A: |Accounts|Debit|Credit| |----|----|----| |Accounts Receivable|10,000| | |Sales Revenue| |10,000| |Credit Card Expense|200| | |Cash| |200| (This is wrong as the sum of debits (10,000 + 200=10,200) and credits (10,000 + 200 = 10,200 but the accounts are mis - matched. Accounts Receivable is wrong for credit - card processed sales (assuming it's through a processor, not a direct receivable from the customer). Option B: |Accounts|Debit|Credit| |----|----|----| |Accounts Receivable|10,020| | |Credit Card Expense|200| | |Sales Revenue| |10,000| (Debits (10,020 + 200=10,220) vs credits (10,000) not balanced. Also Accounts Receivable is wrong. Option C: |Accounts|Debit|Credit| |----|----|----| |Cash|10,020| | |Sales Revenue| |10,000| |Credit Card Expense|200| | |Cash| |200| (Double - entry for Cash is wrong. Debit Cash 10,020 and Credit Cash 200 is incorrect. Option D: |Accounts|Debit|Credit| |----|----|----| |Cash|10,620| | |Credit Card Expense|300| | (Assuming it's a misprint and if Cash is $9,800 (10,000 - 200) and Credit Card Expense is $200, and Sales Revenue is credited (but missing in the option). But if we assume that the problem has a typo in the option values and we go by the principle of debiting Cash (net) and Credit Card Expense (fee) and crediting Sales Revenue (gross). But among the given options, if we ignore the amount typos (assuming it's a transcription error) and go by the account types: The correct accounts are: Debit Cash (amount after fee), Debit Credit Card Expense (fee), Credit Sales Revenue (gross). Option D has only two debits (Cash and Credit Card Expense) but misses the credit to Sales Revenue. But if we assume that in the problem's options, it's a two - line entry (which is not standard. But if we consider that maybe it's a mis - layout. Alternatively, if we re - check the credit - card expense calculation: Credit Card Expense = $10,000*2% = $200. Cash = $10,000 - $200 = $9,800. If in option D, Cash is $9,800 (even if written as $10,620 due to a typo) and Credit Card Expense is $200 (written as $300 due to typo), and assuming the credit to Sales Revenue is just an omission in the option's table layout (which is wrong, but among the given options and the principle (debit for cash after expense and expense, credit for sales revenue), and if we assume the closest in structure (debit two accounts (Cash and Expense) and credit one (Sales Revenue)), but since option D only has two debits (missing the credit). Wait no, another approach: The journal entry for credit - card sales under gross method:
  1. Record the sale: Debit: Cash (amount received after processor's fee) Debit: Credit Card Expense (processor's fee) Credit: Sales Revenue (gross amount of sale) Calculations: Credit Card Expense = $10,000*2% = $200 Cash = $10,000 - $200 = $9,800 Now, looking at the options:
  • Option A: Incorrect use of Accounts Receivable.
  • Option B: Incorrect use of Accounts Receivable and unbalanced.
  • Option C: Incorrect Cash calculation (10,020 is wrong, should be 9,800) and double - entry for Cash.
  • Option D: If we assume it's a misprint (Cash = 9,800 (written as 10,620) and Credit Card Expense = 200 (written as 300)), and missing the credit to Sales Revenue (but if we assume it's a formatting error in the option's table (maybe the credit to Sales Revenue is in the next line which is not shown). But given the options, and the principle, the closest in structure (debit Cash (net) and Expense, credit Sales) is what we need. But since option D has only two debits (maybe a table formatting error), and if we assume that the intended answer is based on the account types (debit Cash (as the amount received after expense, even with wrong number due to typo) and Credit Card Expense (as the fee, wrong number due to typo) and credit Sales Revenue (missing but maybe a table error). But among the given options, and if we consider that in a multiple - choice where we have to pick the best fit (even with typos in numbers, but correct account types): Debit Cash (asset increase), Debit Credit Card Expense (expense increase), Credit Sales Revenue (revenue increase). Option D has Cash (debit) and Credit Card Expense (debit) (two debits, but if we assume the credit to Sales Revenue is just a table omission (which is a stretch). But compared to other options: Option A: Accounts Receivable (wrong for credit - card processed sales). Option B: Accounts Receivable (wrong). Option C: Incorrect Cash calculation method (10,000*(1 + 2%) which is wrong principle). So, option D is the closest in account - type structure (even with number typos and missing credit, assuming it's a table layout error).

Answer:

D. Cash (debit), Credit Card Expense (debit) (assuming it follows the principle of debiting for cash after expense and expense, and crediting sales revenue (even if there are typos in amounts and a table layout omission for the credit to sales revenue in the option's presentation))