Question

Travel Inc. sells tickets for a Caribbean cruise on ShipAway Cruise Lines to Carmel Company employees. The total cruise package price to Carmel Company employees is \(70,000. Travel Inc. receives a commission of 6% of the total price. Travel Inc. therefore remits \)65,800 to ShipAway. Prepare the journal entry to record the remittance and revenue recognized by Travel Inc. on this transaction.

Short answer

Revenue recognized = $4,200

Amount Remitted = $65,800

Step-by-step solution

Meaning of Remittance

Aremittance is a monetary payment that is returned to or transferred to someone else. It is used for practically any form of payment, from bills to invoices, and it is typically used for international payments, such as when one side is in a different country.

Remittance and revenue recognized by Travel Inc.

Date	Particular	Debit ($)	Credit ($)
	Cash a/c	70,000
	Accounts payable a/c		70,000
	Accounts payable a/c	70,000
	Cash a/c		65,800
	Sales revenue a/c		4,200