{"id":202940,"date":"2025-03-18T09:44:19","date_gmt":"2025-03-18T09:44:19","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=202940"},"modified":"2025-03-18T09:44:21","modified_gmt":"2025-03-18T09:44:21","slug":"on-april-5-donnas-boutique-accepted-a-visa-card-for-a-750-purchase","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/18\/on-april-5-donnas-boutique-accepted-a-visa-card-for-a-750-purchase\/","title":{"rendered":"On April 5 Donna\u2019s Boutique accepted a Visa card for a $750 purchase"},"content":{"rendered":"\n

On April 5 Donna\u2019s Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a<\/p>\n\n\n\n

a. credit to Cash of $735.
b. debit to Cash of $750.
c. debit to Service Charge Expense of $15.
d. credit to Service Charge Expense of $15.<\/p>\n\n\n\n

The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is a. credit to Cash of $735.<\/strong><\/p>\n\n\n\n

Here\u2019s a detailed explanation of why this is the correct answer:<\/p>\n\n\n\n

On April 5, Donna\u2019s Boutique made a sale of $750, accepting a Visa card for the payment. However, Visa charges a 2% service fee for processing the transaction. This means that the boutique will not receive the full $750, as Visa will retain 2% of the total amount as their fee.<\/p>\n\n\n\n

Step-by-Step Breakdown:<\/h3>\n\n\n\n
    \n
  1. Amount of Service Fee<\/strong>:
    The service fee charged by Visa is calculated as 2% of $750:
    [
    750 \\times 0.02 = 15
    ]
    Therefore, Visa will deduct $15 from the transaction amount.<\/li>\n\n\n\n
  2. Amount Donna\u2019s Boutique Will Receive<\/strong>:
    Donna\u2019s Boutique will receive the remaining amount after the service fee is deducted:
    [
    750 – 15 = 735
    ]
    So, Donna\u2019s Boutique will receive $735 in cash.<\/li>\n\n\n\n
  3. Journal Entry<\/strong>:
    To record this transaction in Donna\u2019s Boutique\u2019s accounting system, the following journal entries will be made:<\/li>\n<\/ol>\n\n\n\n
      \n
    • Debit to Accounts Receivable<\/strong> (or Visa Receivable) for the full amount of $750, because this is the total amount of the sale before the service fee.<\/li>\n\n\n\n
    • Credit to Sales Revenue<\/strong> for the full amount of $750, as the boutique made a sale of $750 worth of goods.<\/li>\n\n\n\n
    • Debit to Service Charge Expense<\/strong> for $15, representing the cost of Visa\u2019s processing fee.<\/li>\n\n\n\n
    • Credit to Cash<\/strong> for $735, which is the amount Donna\u2019s Boutique actually receives after Visa\u2019s fee is deducted.<\/li>\n<\/ul>\n\n\n\n

      Correct Answer:<\/h3>\n\n\n\n

      Since the cash received is $735, the correct journal entry will include a credit to Cash of $735<\/strong>.<\/p>\n\n\n\n

      Thus, the answer is a. credit to Cash of $735.<\/strong><\/p>\n\n\n\n

      Why the Other Options Are Incorrect:<\/h3>\n\n\n\n
        \n
      • b. debit to Cash of $750<\/strong>: This is incorrect because Donna\u2019s Boutique doesn\u2019t receive the full $750\u2014Visa takes a 2% fee.<\/li>\n\n\n\n
      • c. debit to Service Charge Expense of $15<\/strong>: While the service charge of $15 is a legitimate expense, the question asks about the entry to record the transaction<\/strong>, not just the expense.<\/li>\n\n\n\n
      • d. credit to Service Charge Expense of $15<\/strong>: This is incorrect because the service charge is an expense, and expenses are debited, not credited.<\/li>\n<\/ul>\n\n\n\n

        So, the accurate and correct answer is a<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

        On April 5 Donna\u2019s Boutique accepted a Visa card for a $750 purchase. Visa charges a 2% service fee. The entry to record this transaction would include a a. credit to Cash of $735.b. debit to Cash of $750.c. debit to Service Charge Expense of $15.d. credit to Service Charge Expense of $15. The correct […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-202940","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202940","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=202940"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202940\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=202940"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=202940"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=202940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}