Entries for sale through credit/debit cards
Now a days sales through Credit/Debit cards are issued by almost every bank in India either directly or which collaboration of some other agencies HSBC Card, SBI Card, ICICI Bank Card, HDFC Card, UTI Card, and Andhra Bank Cards are some of the popular cards.
The procedures of issuing Credit/Debit Cards are as follows
1) A small plastic card called credit card is issued by bank to a prospective.
customer, after verifying his credibility, which is generally reassured by his income sources. Debit card is issued by bank to a customer who has an account with the bank, marinating a minimum balance. Now a days ATM card issued by the bank can also be used debit card. This card would be containing an embossed 16 digit number and also the name of the cardholder.
From the Sellers Point of view, this type of sales is equivalent to a cash sales, Commission charged by the bank will be treated as selling expense. The following general entries will be made in the seller's book of accounts.
1. BANK A/c Dr.
Now a days sales through Credit/Debit cards are issued by almost every bank in India either directly or which collaboration of some other agencies HSBC Card, SBI Card, ICICI Bank Card, HDFC Card, UTI Card, and Andhra Bank Cards are some of the popular cards.
The procedures of issuing Credit/Debit Cards are as follows
1) A small plastic card called credit card is issued by bank to a prospective.
customer, after verifying his credibility, which is generally reassured by his income sources. Debit card is issued by bank to a customer who has an account with the bank, marinating a minimum balance. Now a days ATM card issued by the bank can also be used debit card. This card would be containing an embossed 16 digit number and also the name of the cardholder.
2) Generally bank changed annual subscription fees from the credit card holder. No fee is changed in case of debit card, though some banks changed a nominal fee on debit card.
3) When the card holder intends to buy some goods or services through credit or debit card, the seller fills in a form generally in triplicate the detains of the goods a with the amount of sales and uses the embossed card which the help of the credit card machine to print the data on that form, Also the customer has to the countersign the form. One carbon copy of the form is given to the customer foe the record.
4) The sellers some up the different amount sold like this and submits, generally everybody, to his bank all the forms. The amount is credited by the bank to the seller’s account and debited to the account of the bank or the company issuing the credit/debit card.
5) The bank issuing the card, charges commission for each such transaction, which varies between 1% to 4% and is immediately debited to seller’s bank account.
6) The bank sends a monthly statement to the card holder. In case of debit card the amount is immediately debited to the card holder’s account whereas in case of credit card, card holder has to pay the amount in full or part. However, if not paid in full, the interest charged.
3) When the card holder intends to buy some goods or services through credit or debit card, the seller fills in a form generally in triplicate the detains of the goods a with the amount of sales and uses the embossed card which the help of the credit card machine to print the data on that form, Also the customer has to the countersign the form. One carbon copy of the form is given to the customer foe the record.
4) The sellers some up the different amount sold like this and submits, generally everybody, to his bank all the forms. The amount is credited by the bank to the seller’s account and debited to the account of the bank or the company issuing the credit/debit card.
5) The bank issuing the card, charges commission for each such transaction, which varies between 1% to 4% and is immediately debited to seller’s bank account.
6) The bank sends a monthly statement to the card holder. In case of debit card the amount is immediately debited to the card holder’s account whereas in case of credit card, card holder has to pay the amount in full or part. However, if not paid in full, the interest charged.
Accounting For Credit/Debit Card Sale
From the Sellers Point of view, this type of sales is equivalent to a cash sales, Commission charged by the bank will be treated as selling expense. The following general entries will be made in the seller's book of accounts.
1. BANK A/c Dr.
To SALES ACCOUNT
(Sales made through Credit/Debit Card)
2. COMMISSION A/c Dr.
To BANK ACCOUNT
(Commission Charged by Bank)
