[The following information applies to the questions displayed below.]
The Yankee Corporation has recently begun to accept credit cards. On July 7, Year 1, Yankee made a credit card sale of $600. The credit card company charges a fee of 3% for handling a credit card transaction.
-Which of the following correctly shows the effects of the sale on July 7?

Question

Quizplus · Accepted Answer

The credit card sale increases total assets (accounts receivable - credit card company) and stockholders' equity (retained earnings) by $582 [or $600 ? ($600 × 3%)]. It increases revenue by $600 and increases expenses (credit card expense) by $18 (or $600 × 3%) and increases net income by $582 (or $600 ? $18). The statement of cash flows is not affected.

[The Following Information Applies to the Questions Displayed Below