Luna Company accepted credit cards in payment for $6,750 of services performed during July 2016. The credit card company charged Luna a 1.75 percent service fee; it paid Luna as soon as it received the invoices.

Luna Company accepted credit cards in payment for $6,750 of services performed during July 2016. The credit card company charged Luna a 1.75 percent service fee; it paid Luna as soon as it received the invoices.

 

Required
a.     Prepare the general journal entry to record the sales revenue.
answer


b.     Prepare the general journal entry for the collection of the receivable from the credit card company.
 
c.    

Based on this information alone, what is the amount of net income earned during the month of July? 

Explanation:

a.

Credit card expense ($6,750 × 1.75%) = $118

c.

Net income:	Sales	$	6,750
	Credit card expense		(118	)
	Net income	$	6,632

Thank you!