Author Question: Credit memos from the bank a. decrease a bank customer's account b. are used to show a bank ... (Read 196 times)

storky111 · **on:** Jul 5, 2018

Credit memos from the bank
a. decrease a bank customer's account
b. are used to show a bank service charge
c. show that a company has deposited a customer's NSF check
d. show the bank has collected a note receivable for the customer

Question 2

Fox Company accepts VISA from its customers. VISA charges Fox Company 6 of sales.

Part A: Show the effect of the following events on the accounting equation, including both account titles and amounts:
Assets Liabilities Shareholder's equity
CC Retained earnings
During 2012, Fox's customers used VISA to purchase 15,000 worth of merchandise. The cost of the goods sold was 5,000.
In 2012, Fox collected the full amount due from VISA.

Part B: Why would Fox Company accept VISA?

GCabra · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

d

Answer to Question 2

Part A:
Shareholders' equity
Assets Liab. CC Retained earnings
14,000 Accounts receivable - VISA 15,000 Sales
(900) Credit card expense
(5,000) COGS
(14,100) Accounts receivable - VISA
14,100 Cash

Part B: Fox might lose sales if it refuses to accept VISA. Furthermore, if customers do not pay their bills, VISA will bear the loss, not Fox Company. If Fox Company issues its own credit cards, it then has the expense of checking the credit of applicants, issuing the cards, billing customers, and collecting from customers. Any amounts that prove uncollectible will be a loss to Fox Company.