Question

G Elliston Company accepted credit card payments for $10,000 of services provided to customers. The credit card company charges a 3% fee for handling the transaction. Which of the following describes the effect of this transaction:

A. increase revenue by $9,700.
B. increase assets by $10,000.
C. increase Retained Earnings by $9, 700.
D. increase net income by $10,000.

Answer 1

C. increase Retained Earnings by $9, 700.

Step-by-step explanation:

Since it is given that the service provided to customers for $10,000 and it is also not reflected the company income so it would be considered after deducting the 4% free from the total amount i.e

= $10,000 - $10,000 × 3%

= $10,000 - $300

= $9,700

Hence, the retained earning is increased by $9,700

Therefore, All other options are wrong