{"id":202944,"date":"2025-03-18T09:47:39","date_gmt":"2025-03-18T09:47:39","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=202944"},"modified":"2025-03-18T09:47:41","modified_gmt":"2025-03-18T09:47:41","slug":"on-april-5-donnas-boutique-accepted-a-visa-card-for-a-750-purchase-2","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-2\/","title":{"rendered":"On April 5 Donna\u2019s Boutique accepted a Visa card for a $750 purchase"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">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<p class=\"wp-block-paragraph\">a. credit to Cash of $735.<br>b. debit to Cash of $750.<br>c. debit to Service Charge Expense of $15.<br>d. credit to Service Charge Expense of $15.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The correct answer is <strong>a. credit to Cash of $735<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">When Donna\u2019s Boutique accepts a Visa card for a $750 purchase, the transaction involves both the amount of the sale and the service fee that Visa charges for processing the payment.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Sale Amount<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The total amount of the sale is $750.<\/li>\n\n\n\n<li>This represents the amount the customer is paying for the goods or services, which will eventually be deposited into Donna\u2019s Boutique\u2019s account, less any service fees.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Visa Service Fee<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Visa charges a <strong>2% service fee<\/strong> on the total sale.<\/li>\n\n\n\n<li>To calculate this, we multiply the sale amount by 2%:<br>[ 750 \\times 0.02 = 15 ]<\/li>\n\n\n\n<li>This means Visa will keep $15 as a service fee, and Donna&#8217;s Boutique will receive the remaining $735.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Cash Received<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>After the service fee is deducted, the actual amount of cash Donna\u2019s Boutique will receive is $735. This amount will be deposited into the boutique&#8217;s account after processing.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Journal Entry<\/strong>:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The entry to record this transaction needs to reflect the sale and the service fee charged by Visa.<\/li>\n\n\n\n<li><strong>Debit<\/strong>: Donna\u2019s Boutique will debit <strong>Accounts Receivable<\/strong> (or possibly &#8220;Cash&#8221; if they receive the full amount upfront) for the total sale amount of $750.<\/li>\n\n\n\n<li><strong>Credit<\/strong>: The boutique will credit <strong>Sales Revenue<\/strong> for $750, recognizing the total sale.<\/li>\n\n\n\n<li><strong>Credit<\/strong>: The service fee of $15 charged by Visa is recognized as a <strong>Service Charge Expense<\/strong>. This is an expense incurred by the business for using the Visa payment system, so a debit will be made to the <strong>Service Charge Expense<\/strong> account.<\/li>\n\n\n\n<li><strong>Credit to Cash<\/strong>: Since the boutique will actually receive $735 (after deducting the service charge), the <strong>Cash<\/strong> account is credited by $735.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Thus, the <strong>credit to Cash<\/strong> is <strong>$735<\/strong>, reflecting the amount Donna\u2019s Boutique will receive after the Visa service fee. The $15 service fee is recorded separately as an expense in the journal entry, and not as part of the cash received.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Therefore, the correct answer is <strong>a. credit to Cash of $735<\/strong>, as that reflects the actual amount received by Donna&#8217;s Boutique after Visa&#8217;s service fee has been deducted.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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 [&hellip;]<\/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-202944","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202944","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=202944"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/202944\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=202944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=202944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=202944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}