Understanding Acme Company's Credit Card Sales Process
Acme Company Credit Card Sales and Cash Receipts
Which of the following statements is true?
a. Acme debits Cash $2,000
b. Acme debits Cash $1,930
c. Acme debits Accounts Receivable - Credit Card Co $2,000
d. Acme debits Accounts Receivable - Credit Card Co $1,930
e. Acme credits Sales $1,930
Answer:
b. Acme debits Cash $1,930
Explanation:
Before passing the journal entry, first we have to do the calculations which is shown below
= Credit card sales - Credit card sales × fee percentage
= $2,000 - $2,000 × 3.5%
= $2,000 - $70
= $1,930
The journal entries are shown below:
Cash A/c Dr $1,930
To Sales A/c $1,930
(Being cash is received after applying the fee percentage)