Simonic Retailers accepted $90,000 of Citibank Visa credit card charges for merchandise sold on July 1. Citibank charges 4% for its credit card use. The entry to record this transaction by Simonic Retailers will include a credit to Sales Revenue of $90,000 and a debit(s) to
A) Cash $86,400 and Service Charge Expense $3,600.
B) Accounts Receivable $86,400 and Service Charge Expense $3,600.
C) Cash $86,400 and Interest Expense $3,600.
D) Accounts Receivable $90,000.

Question

Quizplus · Accepted Answer

Simonic Retailers will receive cash of $86,400 after Citibank deducts its 4% service charge ($90,000 x 4% = $3,600). Therefore, the entry will include a debit to Cash for $86,400 and a debit to Service Charge Expense for $3,600.

Simonic Retailers Accepted $90,000 of Citibank Visa Credit Card Charges