Question

Customer World expects credit card companies to deposit funds in their business account for their sales where a customer uses a credit card to pay. If Customer World earned $80 from a sale and the transaction fee was $1.50, how much should Customer World expect the credit card company to deposit into their business account?

Answer 1

Answer:

$78.50

Explanation:

Customer Ward earned $80 for a transaction with a transaction fee of $1.5.

In Retail Credit Card, the business (in this case Customer World) is expected to assume all transaction fees and charges.

Therefore, Customer World would expect the Credit card company to deduct the transaction charge before deposition into their account.

The amount to be deposited is:

$80-$1.5

=$78.5

The Credit Card company will deposit $78.50 into Customer World's Business Account.

Answer 2

Answer:

$78.50

Explanation:

There are two ways to record credit card sales:

1) If the credit card company pays immediately:

Dr Cash 78.50

Dr Credit card fees 1.50

    Cr Sales revenue 80

2) If the credit card company pays at a later date:

Dr Accounts receivable 80

    Cr Sales revenue 80

once the credit card company pays

Dr Cash 78.50

Dr Credit card fees 1.50

    Cr Accounts receivable 80

Whichever way you choose to record the transaction, the total amount collected will be = total sales - credit card fees = $80 - $1.50 = $78.50