The Magic Shoppe sells games, books, and party favors. Most customers charge their purchases to national credit cards. Following is a summary of The Magic Shoppe€™s total credit card sales for July and the service fee of each credit card honored by the business.

Required:
(a) Record these July credit card sales and the collection entries from the credit card companies in The Magic Shoppe€™s accounting records.
(b) Why do retail stores honor bank credit cards? Does allowing customers to pay for their purchases with credit cards effectively reduce a business€™s profit because of the fees that these cards charge? Explain your answer.
(c) Given the relatively high service fee charged by Big Card, why might The Magic hoppe choose to honor that card?

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PlasticCard BanCard BigCard July credit card sales Service fee $21,000 $44,000 $74,500 3% 2% 5%