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LenKa [72]
3 years ago
6

On March 17th, Pinny Sporting Goods accepted a credit card purchase for $900. The credit card company charges a 2% service fee.

The entry to record this transaction would include a A : debit to Service Charge Expense of $18. B : credit to Service Charge Expense of $18. C : credit to Cash of $882. D : debit to Cash of $900.
Mathematics
1 answer:
Vera_Pavlovna [14]3 years ago
6 0

Answer:

A : debit to Service Charge Expense of $18.

Step-by-step explanation:

First, one should calculate the value, in dollars of the credit card service fee

Fee = 2% x $900 = $18.

Since this fee is classified as "money coming out" of the account, the entry to a record of this transaction should include a debit to Service Charge Expense of $18.

The correct answer is alternative A.

*The whole purchase amount ($900) should be credited and the service expense should be debited, unlike alternative C, which merges both entries into one.

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