FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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**ACCT 2000 Study Guide - Chapter 5**
3) Northern Industries accepted a credit card sale for $14,000. The credit card company charges 2%.
a. What is the entry for this transaction on the horizontal equation?
b. What is the impact of collecting the payment from the credit card company?
(Show the individual accounts impacted in the asset section)
| Assets | = | Liabilities | + | Stockholders’ Equity | Revenues | Expenses | = | Net Income | Cash Flow |
|--------|---|-------------|---|----------------------|----------|----------|---|------------|-----------|
| a. | | | | | | | | | |
| b. | | | | | | | | | |
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**Explanation:**
This section of the study guide discusses financial transactions related to credit card sales. The company, Northern Industries, makes a credit card sale of $14,000 and needs to account for the 2% fee charged by the credit card company. The questions focus on creating appropriate accounting entries and analyzing the impact on financial statements using the horizontal equation format.
The table provided serves as a framework for students to fill in, showing how this transaction affects different accounts in the balance sheet and income statement.
Expert Solution
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Golden Rules of Accounting
- Debit the receiver, credit the giver.
- Debit what comes in, credit what goes out.
- Debit all expenses and losses and credit all incomes and gains.
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