Glebe Company accepted a credit card account receivable in exchange for $1,100 of services provided to a customer.The credit card company charges a 5% fee for handling the transaction.What effect will the collection of cash from the credit card company have on the elements of the financial statements?
A)Increase assets by $1,045
B)Decrease assets and stockholders' equity by $55
C)Increase assets by $1,100
D)None of these answer choices are correct

Question

Quizplus · Accepted Answer

Collecting the amount due from the credit card company increases assets (cash)and decreases assets (accounts receivable - credit card company),resulting in no net effect on total assets,total liabilities,or stockholders' equity.

Glebe Company Accepted a Credit Card Account Receivable in Exchange