Bank Credit Cards Credit card sales made on bank credit cards, such as VISA or MasterCard, are similar to cash sales and result in an immediate receipt of cash by the business. That is, the seller deposits the bank credit card invoices in the company bank account, and these invoices are treated the same as checks deposited by the bank. To illustrate, assume the Main Company had $5,000 of sales on VISA credit cards and is charged a 5 percent service charge. The general journal entry to record the deposit of the VISA invoices is: Cash 4,750 Credit Card Expense 250 Sales 5,000 Nonbank Credit Cards Credit card sales made on nonbank credit cards are similar to sales on account. That is, the seller must periodically bill the credit card agency and payment is received at a later date. Consequently, the acceptance of nonbank credit cards by the seller results in the added burden of the delayed receipt of cash. To illustrate, assume that the Main Company also made sales of $3,000 on American Express credit cards. Main bills American Express and makes the following general journal entry: When the invoice is paid, American Express deducts its service charge and mails the balance to the seller. Main records the following general journal entry to record the receipt of the amount owed from American Express (assume a 5 percent service charge): Notes Receivable Notes receivable are written promises to pay a certain sum of money on a specific date. A promissory note is used by individuals to finance the purchase of an automobile or to borrow money. Notes may also be required by companies selling products to new customers or when a customer wishes to extend the payment period on an existing account receivable. The person or company making the promise to pay 1s termed the maker of the note, and the person or company to whom payment is to be made is termed the payee. Most notes require the payment of interest. Interest is a charge for the use of money. The original amount of the note is termed the principal or face value. The total amount to be paid by the maker of a note is termed the maturity value. The maturity value is the sum of a note's principal and interest. Computing Interest Interest is computed by the following formula: Interest = Principal × Rate × Time Interest rates are stated on an annual basis unless specified other-wise.? For example, the interest on a $5,000, one-year note, with a stated rate of interest of 9 percent, is computed as follows: