A credit card works by letting you borrow money from the credit card issuer to buy goods and services. You then pay the amount you've borrowed back either in full, or in monthly instalments.
How do payments on a credit card work?
- Once you purchase goods or services with a credit card, the purchase amount is deducted from your available balance. Conversely, when you make a payment on your credit card account, you will have more available credit to use for future purchases.
- You make one payment 15 days before your statement is due and another payment three days before the due date. By doing this, you can lower your overall credit utilization ratio, which can raise your credit score. Keeping a good credit score is important if you want to apply for new credit cards.
- If you regularly use your credit card to make purchases but repay it in full, your credit score will most likely be better than if you carry the balance month to month. Your credit utilization ratio is another important factor that affects your credit score.
- Carrying a balance does not help your credit score, so it's always best to pay your balance in full each month. The impact of not doing paying in full each month depends on how large of a balance you're carrying compared to your credit limit.
Increase Retained Earnings by $9, 700.
Since it is given that the service provided to customers for $10,000 and it is also not reflected the company income so it would be considered after deducting the 4% free from the total amount i.e
= $10,000 - $10,000 Ă— 3%
= $10,000 - $300
= $9,700
Hence, the retained earning is increased by  $9,700
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