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The Griffin Corporation Accepted a Credit Card for a Sale

Question 45

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The Griffin Corporation accepted a credit card for a sale of $3,000 on December 16,Year 1.The credit card company charges a fee of 4%.On January 5,Year 2,Griffin received payment from the credit card company.Indicate whether each of the following statements is true or false.

Premises:
The December 16 transaction increases total revenues and total expenses on the Year 1 income statement.
Griffin should increase the balance of the accounts receivable-credit card company account by $3,000 on December 16,Year 1.
The collection of cash increases total assets in Year 2.
Griffin should record $2,880 of revenue in Year 1 when the sale is made.
The sale has no impact on the statement of cash flows in Year 1.
Responses:
True
False

Correct Answer:

The December 16 transaction increases total revenues and total expenses on the Year 1 income statement.
Griffin should increase the balance of the accounts receivable-credit card company account by $3,000 on December 16,Year 1.
The collection of cash increases total assets in Year 2.
Griffin should record $2,880 of revenue in Year 1 when the sale is made.
The sale has no impact on the statement of cash flows in Year 1.
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