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

Accounting Mar 25, 2021

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

Expert Solution

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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