Question

Bramble Corp. accepted a national credit card for a $10200 purchase. The cost of the goods sold is $6200. The credit card company charges a 2% fee. What is the impact of this transaction on net operating income?

Answer 1

It reduces the net operating income by $2,040

Step-by-step explanation:

The charge of 2% on sales is part of the selling and distribution expense which would be deducted from the gross profit to get the operating profit or net income/(loss).

The credit card charge amounts to

= 2% × $102,000

= $2,040

As such, the charge by the credit card company reduces net operating income by $2,040.

Answer 2

Step-by-step explanation:

The impact of the this transaction on the net operating income = $ 10200 - $ 6200 - ( 0.02 × $ 10200) = $ 3796