Ahmed Company accepts a credit card as payment for $950 of services provided for the customer. The credit card company charges a 4% handling charge for its collection services. Select the answer that shows how the entry to record the sale would affect Ahmed's financial statements.
A)Option A
B)Option B
C)Option C
D)Option D

Question

Ahmed Company accepts a credit card as payment for $950 of services provided for the customer. The credit card company charges a 4% handling charge for its collection services. Select the answer that shows how the entry to record the sale would affect Ahmed's financial statements. 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The sale increases assets (accounts receivable - credit card) by $912, the amount to be collected from the credit card company, increases revenue by $950, and increases expenses (credit card expense) by $38 (4% of $950). It increases net income and equity by $912, and does not affect the statement of cash flows.

Ahmed Company Accepts a Credit Card as Payment for $950