Alberta Company accepts a credit card as payment for $450 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 Alberta's financial statements.
A) Option A
B) Option B
C) Option C
D) Option D

Question

Alberta Company accepts a credit card as payment for $450 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 Alberta'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 $432, the amount to be collected from the credit card company, increases revenue by $450, and increases expenses (credit card expense) by $18 (4% of $450). Net income and equity increase by $432, and the statement of cash flows is not affected.

Alberta Company Accepts a Credit Card as Payment for $450