Question : Learning Objective 4-4 1) Credit card sales benefit companies because ________. A) : 1253212

Learning Objective 4-4

1) Credit card sales benefit companies because ________.

A) the risk of uncollectible accounts is transferred to credit card companies

B) fewer customers will be able to buy products or services

C) the credit card company is not responsible for evaluating customers’ credit-worthiness

D) they will receive less than the full amount of the sale from the credit card company

2) Timmy’s Tires sold $18,750 worth of tires to customers using VISA. The credit card fee is 4% of sales. The amount of sales Timmy’s Tires should recognize is ________.

A) $750

B) $19,500

C) $18,750

D) $18,000

3) Timmy’s Tires sold $18,750 worth of tires to customers using MasterCard. The credit card fee is 4% of sales. What is the amount of cash Timmy’s Tires should collect from sales?

A) $750

B) $19,500

C) $18,750

D) $18,000

4) Brooke’s Bikes sold $11,235 worth of mountain bikes to customers using bank credit cards during October. The banks charge a credit card fee of 4% of sales. The amount of sales Brooke’s Bikes should recognize for October is _________.

A) $449.40

B) $10,785.60

C) $11,235

D) $11,684.40

5) Brooke’s Bikes sold $11,235 worth of mountain bikes to customers using bank credit cards during October. The banks charge a credit card fee of 4% of sales. What is the amount of cash Brooke’s Bikes should collect for October credit card sales?

A) $449.40

B) $10,785.60

C) $11,235

D) $11,684.40

6) Team Shirts decided to accept bankcards from credit customers. Team Shirts should expect ________.

A) an increase in its allowance for uncollectible accounts

B) a decrease in its bad debts expense

C) a decrease in its credit card expense

D) an increase in its write-off of specific customer accounts

7) Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. MasterCard will directly deposit the cash from this sale within 24 hours. How much cash will MasterCard deposit?

A) $5,000

B) $4,850

C) $150

D) $5,150

8) Sally has a new VISA card that was issued by MBNA (Maryland Bank of North America). Sally used her VISA card to buy five kegs of beer at Crock‘n’ Keg. Three months later, Sally still has not paid her VISA bill. Which company carries the account receivable from this sale?

A) MBNA

B) Sally

C) Crock‘n’ Keg

D) both Sally and Crock‘n’ Keg

9) Magic Cow Co. made a sale for $5,000 to a customer who paid with MasterCard. MasterCard charges Magic Cow a fee of 3% of sales. How much sales revenue will Magic Cow record?

A) $5,000

B) $4,850

C) $150

D) $5,150

10) Benefits of allowing customers to use credit cards for purchases include the potential increase in the number of customers and elimination of the risks associated with sales on account.

11) MasterCard charges Team Shirts 4% of sales. On June 15, Team Shirts sold $4,000 worth of

T-shirts on MasterCard accounts. Team Shirts paid a fee of $174.40 to MasterCard.