Question

Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system).

1. Sold \(20,000 of merchandise, which cost \)15,000, on MasterCard credit cards. MasterCard charges a 5% fee.

Short answer

A perpetual inventory system is the type of inventory recording system used in production-based organizations where the sale and purchase of merchandise inventory are recorded using computerized systems.

Step-by-step solution

Introduction

The journal entry for the above transaction will be recorded in two sections, i.e., first, the entry for the sale will be recorded following the entry of the merchandise inventory sold.

Journal Entry

Date	Particulars	Debit	Credit
a	Cash	$19,000
	Credit card expense ($20,000*5%)	$1,000
	Sales		$20,000
	(To record the sales)
b	Cost of goods sold	$15,000
	Merchandise Inventory		$15,000
	(To record the cost of goods sold)