(asset acct.) 1 Accounts Receivable - MC/Visa 102.00 (expense acct.) 2 Credit Card Service Charge - MC/Visa 6.00 (revenue acct.) 3 Sales 100.00 (liability acct.) 4 Sales Tax Payable 8.00 (cost acct.) 5 Merchandise Purchases (COGS) - CDs 75.00 (asset acct.) 6 Inventory - CDs 75.00
In case the text gets all distorted when I post this, here is a written description of the DR/CR. 1) debit the asset acct. AR-Mastercard for total sale amt (including tax) less CC fee amt.- 102.00 2) debit the expense acct. CC fees - 6.00 3) credit revenue acct. Sales for sale amount less tax -100.00 4) credit liability acct. Sales Tax Payable - 8.00 5) debit Cost acct. Merchandise Purchases - CDs - 75.00 6) credit Inventory - CDs - 75.00
I hope this is correct, text books never show all the accounts that get hit. They have very simple examples.
Now, I'm not sure how to handle the return. Since we have to now give a charge back to the customer, we have to go through MC again so I'm assuming they will charge me again for the transaction, that is I just can't reverse the cc service charge #2 above. I guess each transaction is charged by the cc company regardless correct?
Any help will be appreciated. TIA J