Tuesday, May 4, 2010

After you’ve checked your merchant statement for accuracy you will make the following journal entry:

Cash                                                            $1,625
Merchant transaction fees                                  225
Terminal Rental & merchant expense                   50
Sales returns                                                     100
           Sales                                                                        2,000
                       Record credit card sales for May

(Remember, debits on the left and credits on the right)

As I wrote previously, the transaction fees will either be deducted as a cost of sale or as an expense. If you had merchant transaction fees of $225 you will see below the two different ways it might appear on your Profit and Loss Statement. In either case the monthly gateway and terminal fees will be expenses. The example shows $50 in monthly merchant statement and rental fees. (I’m not showing the expense side in the first example, the statement and rental fees would be listed as in example 2.)

Example 1:

Sales                                                                       $2,000
           Cost of Goods Sold
                   Supplies                                    $300
                   Merchant Transaction Fees          225
            Net Cost of Goods Sold                                $525

Gross Profit on Sales                                              $1,475

Example 2:

       Office Expenses                                 $100
       Postage                                                 88
       Marketing                                            120
       Merchant Transaction Fees                  225
       Terminal rental & merchant exp              50
Total Expense                                                            $583

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