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Some retailers issue their own credit cards. When you use a retailer's credit card (JCPenney (USA), for example), the retailer charges interest on the balance

Some retailers issue their own credit cards. When you use a retailer's credit card (JCPenney (USA), for example), the retailer charges interest on the balance due if not paid within a specified period (usually 25-30 days).

1.Assume that you use your JCPenney credit card to purchase clothing with a sales price of $300 on June 1, 2017. JCPenney will increase (debit) Accounts Receivable for $300 and increase (credit) Sales Revenue for $300 (cost of goods sold entry omitted) as follows.

2.Assuming that you owe $300 at the end of the month, and JCPenney charges 1.5% per month on the balance due, the adjusting entry that JCPenney makes to record interest revenue of $4.50 ($300 1.5%) on June 30 is as follows.

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