Merchant Statements

When you receive your first Merchant Statement it might look a little overwhelming.  There are lots of numbers to decipher but let me urge you to take the time to review your statement and process the numbers separately rather than just recording the net cash you received.  Today we’ll review 2 sections of the merchant statement.

The heading of the statement will contain some general information: your merchant number (use when calling with questions), bank routing number (a unique number that identifies your bank), deposit account number (identifies your account at the bank) and processing month. 

The next section contains a summary of your sales by card type, any credits you might have processed, the net sale amount (sales less credits), the average transaction amount, the discount percentage rate and discount amount due to the bank.   Check the sales total against your record of credit card sales that you’ve been keeping and make sure they are the same.  Different transaction types and cards are processed at different discount rates – check these for accuracy.  Now, let’s assume the month’s sale amount was $1,200 at a 2.5% discount rate.  The entry you make (if you haven’t already recorded the sales) will look like this:

            Cash                                                 $1,170.00

            Credit Card Discount Expense               $30.00

                        Sales                                                      $1,200.00

(As a review, journal entries are written with the debits on the left and the credits on the right.  In this example, cash and credit card discount expense are debits and sales is a credit, all increases to general ledger accounts.)

If you have already recorded your sales because you make entries as they occur your original entry would have been:

            Accounts receivable                         $1,200.00

                        Sales                                                    $1,200.00

After you receive your statement you will make the following entry:

            Cash                                              $1,170.00

            Credit Card Discount Expense             30.00

                        Accounts receivable                             $1,200.00

This entry will reduce the balance on your accounts receivable account, increase the balance of your cash account and increase the balance of your credit card discount expense account.