Using iTunes credits with Family Sharing

I used to have a debit card associated with my Apple ID, but now that we've enabled Family Sharing with a child on the account, I am required to use a credit card. However, I don't want to put iTunes charges on a credit card. I thought I could avoid this by adding iTunes credit to our accounts. So, I decided to test this. We have her settings set to "ask to buy".
I have credit on my (the organizer's) account. I attempted to purchase a song using my daughter's account on her device. I thought I was supposed to get a message on my phone telling me that she was requesting to make a purchase. Instead, I got a message on her account on her device with a pop-up that said I needed to enter my security code (on her device).
My questions:
- Why was I not notified on my device that she was attempting to make a purchase? Nothing I read suggested that she would get messages on her device that I had to enter information on it. Was this a one-off thing for setting it up? Or, does this only work with apps and not music?
- If I entered the security code, would it charge my credit card or would it realize that I had credit on my account and deduct it from there first?
- If I apply credit to her account, is it true that I will not get a message to verify her purchase?
Thanks for any insight.

iTunes store credit is used for payment if it is on the account.  By that, if your daughter has store credit, and she makes a purchase, it would be deducted from her store credit - not yours.  So if two children (Billy and John) each have $10.00 in their respective accounts, only THEY can use the credits - iTunes store credit is not shared.  If there is not sufficient store credit, then the organizer's credit card will be charged to cover the purchase.
Regarding the pop up security code message, do you still have a restriction set on her device?  If so, that could be interfering with the "Ask to Buy" feature of family sharing.
Regarding the last question, I am not sure.  The documents are not very specific, but I have read that if Ask to Buy is enabled, you will receive notification if the child tries to download free apps.

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