[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?

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

Question

[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?

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

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