Acme Company has an agreement with a major credit card company which calls for c

Question

Acme Company has an agreement with a major credit card company which calls for cash to be received immediately upon deposit of Acme customers' credit card sales receipts. The credit card company receives 3.5% of card sales as its fee. If Acme has $2,000 in credit card sales, 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

Explanation / Answer

First you multiply the total amount of sales by the fee that the company receives 2000*.035 = 70 Then you subtract the 70 from the 2000 2000-70 = 1930 Since you are depositing 2000 worth of sales receipts less the company fee you are debiting cash The answer is b Debit Cash 1930

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