Prepare journal entries for the following credit card sales transactions (the company uses the perpetual inventory system). Sold $32,000 of merchandise, which cost $24,600, on Mastercard credit cards. Mastercard charges a 5% fee. Sold $6,200 of merchandise, which cost $3,600, on an assortment of bank credit cards. These cards charge a 4% fee.

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Credit card

A credit card is provided by financial institutions or banks, which permits a person to borrow money on a preapproved limit for purchases on a credit basis. The credit limit is decided by the institution and bank which issues a credit card depending on the person’s credit score and income. A cardholder can use the card for credit purchases, a balance transfer, cash advances.