Levine Company uses the perpetual inventory system and allows customers to use two credit cards in charging purchases. With the Suntrust Bank Card, Levine receives an immediate credit to its account when it deposits salesreceipts. Suntrust assesses a 4% service charge for credit card sales. The credit card that Levine accepts is the Continental Card. Levine sends its accumulated receipts to Continental on a weekly basis and is paid by Continental about a week later. Continental assesse a 2.5% charge on sales for using its card. Prepare journal entries to record the following selected credit card transactions of Levine Company. a.Sold merchandise for $8, 400 (that had cost $6,000) and accepted the customer's Suntrust Bank Card. The Suntrust receipts are immediately deposited in Levine's bank account. b. Sold merchandise for $5, 600 (that had cost $3, 500) and accepted the customer's Continental Card. Transferred $5, 600 of credit card receipts to Continental, requesting payment. c. Received Continental's check for the April 12 billing, less the service charge.

                                   Levine Company

                                   Journal Entries

Date              Description                                      DR                        CR

a.                   Bank                                              8,064

                    Service Charge                                 336

                 Sales                                                                              8,400

              Being the sales of goods

               Cost of Goods sold                             6,000

                Merchandising Inventory                                              6,000

            Being the cost of goods sold

b.         Account Receivable(Continental)          5,600

           Sales                                                                                 5,600

           Being the sales of goods

            Cost of Goods sold                                3,500

            Merchandising Inventory                                              3500

          Being the cost of goods sold

April 12  Cash                                                       5,460

               Service Charge                                        140

                Account Receivable                                                   5,600

            Being the amount received from Continental

Explanation: