TextbooksCom Accepts VISA for Payments of Purchases Made by Students

question 66

Multiple Choice

Textbooks.com accepts VISA for payments of purchases made by students.The credit card drafts are deposited directly in a bank account.VISA charges a 2% collection fee.Credit card drafts totaling $12,000 are deposited during September.The effect on the accounting equation to record the sales and deposits will include

• A) An increase in Cash for $12,000
• B) An increase to Sales for $11,760
• C) An increase to Accounts Receivable for $11,760
• D) An increase in Collection Fee Expense for $240

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Definitions:

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to investors.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities. It represents ownership equity spread among shareholders.

Shares Outstanding

The total number of shares of a corporation that have been issued and are held by shareholders.