Asked by Aveyan Walker on Apr 27, 2024
Verified
Big Stores, Inc., accepts credit cards.The clearinghouse collection fee is 3%.If credit card sales are $75, 000 for the current month, the correct summary journal entry is
A)
Accounts Receivable 72,750 Sales 72,750\begin{array}{cc}\text { Accounts Receivable } & 72,750 \\\text { Sales } & 72,750\end{array} Accounts Receivable Sales 72,75072,750
B)
Accounts Receivable 75,000 Sales 75,000\begin{array}{lr}\text { Accounts Receivable } & 75,000 \\\text { Sales } & 75,000\end{array} Accounts Receivable Sales 75,00075,000
C)
Accounts Receivable 72,750 Credit Card Expense 2,250 Sales 75,000\begin{array}{cc}\text { Accounts Receivable } & 72,750 \\\text { Credit Card Expense } & 2,250 \\\text { Sales } & 75,000\end{array} Accounts Receivable Credit Card Expense Sales 72,7502,25075,000
D)
Accounts Receivable 75,000 Credit Card Discount 2,250 Sales 72,750\begin{array}{lc}\text { Accounts Receivable } & 75,000 \\\text { Credit Card Discount } & 2,250 \\\text { Sales } & 72,750\end{array} Accounts Receivable Credit Card Discount Sales 75,0002,25072,750
Clearinghouse Collection Fee
A charge levied by a clearinghouse for handling the processing and settlement of transactions between financial institutions.
Credit Card Sales
Transactions in which customers use credit cards to pay for goods or services, creating a receivable for the seller until payment is processed by the card issuer.
Summary Journal Entry
A consolidated record that summarizes multiple transactions into a single entry within the accounting records.
- Analyze the fiscal consequences of offering goods on credit, considering both expenditure and revenue aspects.
Verified Answer
TD
Thuý Di?m Ngô Nguy?nApr 30, 2024
Final Answer :
C
Explanation :
The correct entry accounts for the sales amount ($75,000), the clearinghouse collection fee (3% of $75,000 = $2,250), and the net amount received ($75,000 - $2,250 = $72,750). This reflects the actual cash received (Accounts Receivable) and the expense incurred (Credit Card Expense) due to the fee, while still recording the total sales amount.
Learning Objectives
- Analyze the fiscal consequences of offering goods on credit, considering both expenditure and revenue aspects.