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

1.sold $29,000 of merchandise, which cost $22,200, on mastercard credit cards. mastercard charges a 5% fee.
2.sold $5,900 of merchandise, which cost $3,450, on an assortment of bank credit cards. these cards charge a 4% fee.

Cash              27,550 debit

credit card fee 1,450 debit

               A/R              29,000 credit

--to record sales for Mastercard--

COGS   22,200 debit

   Inventory       22,200 credit

--to record cost of good sold for the previous sale--

Cash              5,664 debit

credit card fee 236 debit

               A/R              5,900 credit

--to record sales for Mastercard--

COGS   3,450 debit

   Inventory       3,450 credit

--to record cost of good sold for the previous sale--

Explanation:

The credit card charges a fee and provides cash for the firm. It removes the effort to collect from the customer.

master card fee and net proceeds:

29,000 x 5% = 1,450

net: 29,000 - 1,450  = 27,550

bank credit card fee and net proceeds:

5,900 x 4% = 236

net 5,900 - 236 = 5,664

answer; intensive use of a sales force and is relatively costly;

decentralization can the employees to get more involved in the business decision making