{"id":202942,"date":"2025-03-18T09:45:52","date_gmt":"2025-03-18T09:45:52","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=202942"},"modified":"2025-03-18T09:45:54","modified_gmt":"2025-03-18T09:45:54","slug":"schofield-retailers-accepted-40000-of-silver-bank-mastercard-credit-card-charges-for-merchandise-sold-on-august-1","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/18\/schofield-retailers-accepted-40000-of-silver-bank-mastercard-credit-card-charges-for-merchandise-sold-on-august-1\/","title":{"rendered":"Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1"},"content":{"rendered":"\n

Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit(s) to<\/p>\n\n\n\n

a. Cash for $38,400 and Service Charge Expense for $1,600.
b. Accounts receivable for $38,400 and Service Charge Expense for $2,400.
c. Cash for $40,000.
d. Accounts Receivable for $40,000.<\/p>\n\n\n\n

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

The correct answer is:<\/p>\n\n\n\n

a. Cash for $38,400 and Service Charge Expense for $1,600.<\/strong><\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

When Schofield Retailers accepts credit card payments for merchandise sold, the transaction needs to be recorded in a way that reflects both the revenue earned from the sale and the costs associated with using the credit card payment system.<\/p>\n\n\n\n

In this case, the total charge for the merchandise sold is $40,000<\/strong>. However, the credit card company, Silver Bank, charges a 4% service fee<\/strong> for processing the transaction. The service charge is deducted from the total amount charged by Silver Bank, meaning Schofield Retailers does not receive the full $40,000.<\/p>\n\n\n\n

Let’s break it down:<\/p>\n\n\n\n

    \n
  1. Sales Revenue<\/strong>: Schofield Retailers made a sale of $40,000<\/strong>, so the company will recognize this as revenue by crediting Sales Revenue<\/strong> for the full amount of the transaction.<\/li>\n\n\n\n
  2. Service Charge Expense<\/strong>: Silver Bank charges a 4% fee on the total sales amount. The service charge is calculated as:
    [
    40,000 \\times 4\\% = 1,600
    ]
    This amount represents the cost to Schofield Retailers for processing the payment. It will be recorded as an expense, specifically Service Charge Expense<\/strong>, for $1,600<\/strong>.<\/li>\n\n\n\n
  3. Cash<\/strong>: After deducting the 4% service charge, Schofield Retailers will actually receive the remaining amount. This is calculated as:
    [
    40,000 – 1,600 = 38,400
    ]
    Schofield Retailers will receive $38,400<\/strong> in cash (or through a bank deposit), so the Cash<\/strong> account is debited for this amount.<\/li>\n<\/ol>\n\n\n\n

    The journal entry:<\/h3>\n\n\n\n
      \n
    • Debit: Cash<\/strong> for $38,400 (the amount Schofield Retailers will actually receive after the service charge is deducted).<\/li>\n\n\n\n
    • Debit: Service Charge Expense<\/strong> for $1,600 (the fee charged by Silver Bank).<\/li>\n\n\n\n
    • Credit: Sales Revenue<\/strong> for $40,000 (the total amount of the sale, as per the merchandise sold).<\/li>\n<\/ul>\n\n\n\n

      Thus, the correct journal entry will match option a<\/strong>: Cash for $38,400<\/strong> and Service Charge Expense for $1,600<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Schofield Retailers accepted $40,000 of Silver Bank MasterCard credit card charges for merchandise sold on August 1. Silver Bank charges 4% for its credit card use. The entry to record this transaction by Schofield Retailers will include a credit to Sales Revenue of $40,000 and a debit(s) to a. Cash for $38,400 and Service Charge […]<\/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-202942","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202942","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=202942"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202942\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=202942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=202942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=202942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}