Glebe Company accepted a credit card account receivable in exchange for $1,100 of services provided to a customer. The credit card company charges a 5% service charge. The collection of cash from the credit card company when it settles the account receivable balance will act to:
A) increase assets by $1,045.
B) decrease assets and equity by $55.
C) increase assets by $1,100.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

The collection of the receivable from the credit card company increases one asset (cash) and decreases another asset (accounts receivable - credit card) by $1,045 ($1,100 - 5% service charge).

Glebe Company Accepted a Credit Card Account Receivable in Exchange