Which journal entry records Debbie's Diamond Jewelers' VISA sales of 8,000 with a 5% discount rate?

Which journal entry records Debbie's Diamond Jewelers' VISA sales of 8,000 with a 5% discount rate?

• A. Debit cash $7,600; debit sales discounts $400; credit sales $8,000
• B. Debit cash $7,600; debit credit card expense $0; credit sales $8,000
• C. Debit cash $8,000; debit credit card expense $0; credit sales $8,000
• D. Debit cash $7,600; debit credit card expense $400; credit sales $8,000

Answer: (D)

When a sale is made with a credit card, you recognize the full sale amount as revenue, but you only receive the net cash after the card processor takes its fee. The VISA processing fee here is 5% of 8,000, which equals 400, so the cash deposited is 7,600. The proper journal entry shows cash received net of the fee and records the processing cost as an expense, with revenue recorded at the gross amount: Debit Cash 7,600; Debit Credit Card Expense 400; Credit Sales 8,000. The other options either omit the processing fee, misstate the cash received, or treat the fee as a reduction of revenue rather than as a separate expense.

When a sale is made with a credit card, you recognize the full sale amount as revenue, but you only receive the net cash after the card processor takes its fee. The VISA processing fee here is 5% of 8,000, which equals 400, so the cash deposited is 7,600. The proper journal entry shows cash received net of the fee and records the processing cost as an expense, with revenue recorded at the gross amount: Debit Cash 7,600; Debit Credit Card Expense 400; Credit Sales 8,000. The other options either omit the processing fee, misstate the cash received, or treat the fee as a reduction of revenue rather than as a separate expense.