The Yankee Corporation has recently begun to accept credit cards. On July 7, Yankee made a credit card sale of $600. The credit card company charges a fee of 3%. Which of the following correctly shows the effects of the sale on July 7? Assume that the credit card fee is recorded on the date of sale.

A) Option A
B) Option B
C) Option C
D) Option D

Question

The Yankee Corporation has recently begun to accept credit cards. On July 7, Yankee made a credit card sale of $600. The credit card company charges a fee of 3%. Which of the following correctly shows the effects of the sale on July 7? Assume that the credit card fee is recorded on the date of sale.
The Yankee Corporation has recently begun to accept credit cards. On July 7, Yankee made a credit card sale of $600. The credit card company charges a fee of 3%. Which of the following correctly shows the effects of the sale on July 7? Assume that the credit card fee is recorded on the date of sale. A) Option A B) Option B C) Option C D) Option D

A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

The sale increases assets (accounts receivable - credit card) by $582, the net amount that will be collected from the credit card company, increases revenue by $600, and increases expenses (credit card expense) by $18 (3% of $600). Net income and equity increase by $582, and the statement of cash flows is unaffected.

The Yankee Corporation Has Recently Begun to Accept Credit Cards