Caine Company accepted credit-card payments of $40,000 for services rendered dur
ID: 2556029 • Letter: C
Question
Caine Company accepted credit-card payments of $40,000 for services rendered during the year. The credit-card company charges a 3% fee for handling the transactions. Which of the following choices accurately reflects how the collection of the receivable due from the credit-card company would affect the company's financial statements?
a. Assets = Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow Cash + A/R + - n/a - n/a + - + OA
b. Assets = Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow Cash + A/R + - n/a n/a n/a n/a n/a n/a
c. Assets = Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow Cash + A/R + - n/a n/a n/a + - + OA
d. Assets = Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow Cash + A/R + - n/a n/a n/a n/a n/a + OA
Explanation / Answer
The collection of the receivable due from the credit-card company will be recorded as: Cash + Accounts receivable - Cash flows from operating activities + Equity, Net income and liabilities will not be affected