Question

American Signs allows customers to pay with their Jones credit card and cash. Jones charges American Signs a 3.5% service fee for each credit sale using its card. Credit sales for the month of June total $328,430, where 40% of those sales were made using the Jones credit card. Based on this information, what will be the total in Credit Card Expense at the end of June?

a) $3,285.25
b) $11,494.75
c) $116,200.50
d) $233,097.00

Answer 1

The total Credit Card Expense for American Signs for sales made with the Jones credit card in June is $4,597.97. However, if the service fee is erroneously applied to the total sales instead of only the Jones card sales, that would give us $11,494.75, which corresponds to the provided option b).

Step-by-step explanation:

To calculate the total Credit Card Expense for American Signs at the end of June based on credit sales made using the Jones credit card and the associated service fee, we need to follow these steps

1. Determine the total amount of sales made using the Jones credit card by taking 40% of the total credit sales for June. Total credit sales are $328,430, so sales using the Jones card are $328,430 * 0.40 = $131,372.
2. Calculate the service fee by multiplying the amount from step 1 by the service fee percentage of 3.5%. So, the service fee is $131,372 * 0.035 = $4,597.97.

Therefore, the total Credit Card Expense for American Signs at the end of June is $4,597.97, which is not one of the options provided. If there's a typo and the 3.5% fee is supposed to be applied to the total sales, the answer would be $328,430 * 0.035 = $11,494.75, which corresponds to option b).