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Woodstock Co. had $500 of credit cards sales. The net cash receipts were deposited immediately into Woodstock's bank account less a 2% fee. The entry to record this sales transaction would include a credit to:Multiple choice question.Sales in the amount for $500Accounts Receivable for $500Sales for $490Accounts Receivable for $490

Question

Woodstock Co. had 500ofcreditcardssales.ThenetcashreceiptsweredepositedimmediatelyintoWoodstocksbankaccountlessa2500 of credit cards sales. The net cash receipts were deposited immediately into Woodstock's bank account less a 2% fee. The entry to record this sales transaction would include a credit to:Multiple choice question.Sales in the amount for 500Accounts Receivable for 500Salesfor500Sales for 490Accounts Receivable for $490

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Solution

The correct answer is "Sales in the amount for $500".

Here's the step-by-step explanation:

  1. Woodstock Co. made a sale of 500viacreditcard.Thismeanstheyhavemadeasaleof500 via credit card. This means they have made a sale of 500, regardless of the method of payment. Therefore, the sales should be recorded as $500.

  2. The credit card company charges a 2% fee. This means Woodstock Co. will receive 5002500 - 2% of 500 = 500500 - 10 = 490.However,thisdoesnotchangetheamountofthesale.The490. However, this does not change the amount of the sale. The 10 is a fee that Woodstock Co. pays to the credit card company for their service.

  3. Therefore, the entry to record this sales transaction would include a credit to Sales for 500.The500. The 10 fee would be recorded separately as a bank or card fee expense.

This problem has been solved

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