T. Hillcrest Co. sold $500 of merchandise on a bank credit card with a 5% fee. The entry to record this sales transaction would include debit(s) to:Multiple choice question.Sales for $500Cash for $500 and Credit Card Expense for $25Cash for $475 and to Credit Card Expense for $25Accounts Receivable for $500
Question
T. Hillcrest Co. sold 500Cash for 25Cash for 25Accounts Receivable for $500
Solution
The correct answer is: Cash for 25.
Here's the step by step explanation:
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T. Hillcrest Co. sold merchandise worth $500. This is the total sales amount before any fees.
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The bank credit card company charges a 5% fee. To calculate this, multiply 25. This is the credit card expense.
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The company will receive the sales amount minus the credit card fee. To calculate this, subtract 500, which equals $475. This is the amount that will be debited to the Cash account.
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Therefore, the journal entry to record this transaction would include a debit to Cash for 25 (the fee charged by the credit card company).
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