Elliston Company accepted credit card payments for $10,000 of services provided to customers.The credit card company charges a 3% fee for handling the transaction.Which of the following describes the effect of this transaction?

Question

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The credit card sale increases total assets (accounts receivable - credit card company)and increases stockholders' equity (retained earnings)by $9,700 [or $10,000 - ($10,000 × 3%)].It increases revenue by $10,000,increases expenses (credit card expense)by $300 (or $10,000 × 3%),and increases net income by $9,700 (or $10,000 -$300).The statement of cash flows is not affected.

Elliston Company Accepted Credit Card Payments for $10,000 of Services