10 pts.) Mercury Co. has an agreement with Titan Credit Card Services which allo
ID: 2600331 • Letter: 1
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10 pts.) Mercury Co. has an agreement with Titan Credit Card Services which allows customers to purchase sweaters with the Titan card. Titan charges Mercury Co. a one percent fee for all sales. In addition, customers may purchase merchandise on the store's credit card. Mercury entered into the following transactions in September 2008. Sold two sweaters to S. Sargrove for $220 on the Titan credit card The cost of the sweaters sold was $118. Sold four sweaters to T. Sandstrom for $420 on the store credit card The cost of the sweaters sold was $288. Sold $32,000 of accounts receivable to the bank, less a 2 percent factoring fee. Sep. 12 Sep. 30 Mercury uses a perpetual inventory system Required: Prepare journal entries to record the three transactions above.Explanation / Answer
Date Account titles Debit Credit Sep. 2 Cash 217.8 Credit card expense (220*1%) 2.2 Sales 220 (Sold two sweaters) Cost of goods sold 118 Inventory 118 (Cost of goods sold recorded) Sep. 12 Cash 415.8 Credit card expense (420*1%) 4.2 Sales 420 (Sold four sweaters) Cost of goods sold 288 Inventory 288 (Cost of goods sold recorded) Sep. 30 Cash 31360 Factoring expenses (32000*2%) 640 Accounts receivable 32000 (Sold accounts receivable to bank)
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