Alberta company accepts a credit card as payment for $450 of services provided for the customer. the credit card company charges a 4% fee for handling the transaction. how does this this transaction affect the elements of the financial statements

Both assets and equity are reduced by $18.

Explanation:

The accounting equation shows the relationship between the elements of a balance sheet which are assets liabilities and equity. This may be expressed mathematically as

Assets = Liabilities + Equity

While assets include fixed assets, cash, inventories, account receivables etc, liabilities include accounts payable, loans payable, accrued expenses etc.

Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.

the acceptance of a a credit card as payment for $450 of services provided for the customer does not affect the accounting equation as it is an increase and a corresponding decrease in assets. However, the charges a 4% fee for handling the transaction which is equivalent to

= 4% * $450

= $18

Is an expense to the company, this reduces the asset. The entries requires for this transaction is

Debit Cash and cash equivalent $432

Debit Credit card charge (p/l) $18

Credit Accounts receivable $450

Hence assets reduces by $18 and equity reduces by $18.

answer; enforce the rules;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.