Chapter 8 - Accounting for Purchases, Accounts Payable, and Cash Payments (SmartBook)

An inventory system updates the merchandise inventory account for every purchase, sale, and purchase return is called a _________ inventory system

Perpetual

A company purchases merchandise for $1,000 plus a freight charge of $100 from a supplier, payment is due in 30 days. The $100 freight charge will be recorded as a (debit/credit) _________ to the _________ account

Debit, freight in

A company receives a credit memorandum from a supplier for $500 for defective product returned. Using a perpetual inventory system, this transaction will be recorded with a credit to the _________ account in the amount of $500

Merchandise inventory

A company purchases merchandise inventory for $1,000 plus freight of $100 from Field Supplier Co., with credit terms 2/10, n/30. The company will record this transaction in a perpetual inventory system with a debit to:

Merchandise inventory for $1,100

A system which updates the inventory records when a physical inventory is taken is called a _________ inventory system

Periodic

The purchaser refers to the return of unsatisfactory goods as a _________

Purchase return

A company that uses the periodic inventory system purchases merchandise inventory for $500 plus freight of $50 from Sunny Supplier Co., with credit terms 2/10, n/30. The company will record this transaction with a debit to:

Purchases for $500

Wiggleville Pet Store received merchandise costing $1,250 on May 5, invoice 1100. Some goods were damaged, and the supplier granted a $250 purchase allowance on their credit memo 686 of May 10. Wiggleville will record this allowance with a credit to:

Purchases returns and allowances

A list of all the balances owed to creditors, prepared to prove that the control account and the subsidiary ledger are equal, is called a _________

Schedule of accounts payable

True or False: A company's internal control process should ensure that the person buying and receiving goods is different from the person making payment

True

True or false: The posting of purchase transactions to the general ledger is done in the same manner as sales transactions

True

A company shows the following balances in the general ledger: Purchases - $800 Freight in - $200 Purchases, Returns, and Allowances - $50 The net delivered cost of purchases is:

$950

The Purchases Returns and Allowances account is a contra cost of goods sold account, and the normal balance of this account is a (debit/credit)

Credit

A price reduction from the amount originally billed is called a purchase _________

Allowance

The actual cost to the business of the merchandise sold to customers is called _________

Cost of goods sold

The net delivered cost of purchases is calculated by:

(Purchases + freight in) - purchases, returns, & allowances

The credit terms 2/10, n/30 means that if payment is made within _________ days of the invoice date, the customer can take a _________% discount. Otherwise payment in full is due in _________ days.

- 10 - 2 - 30

On May 4, Roscoe Grocery received merchandise costing $3,500 with freight charges of $200 paid by the supplier and added to the invoice, terms 2/10, n/30. Some goods were returned, and, on May 11, the supplier issued a credit memo in the amount of $400. Roscoe paid the amount due on May 14 and recorded the transaction with credits to:

- Cash - Purchases discounts

The objectives of an internal control system include the following:

- Create written proof that purchases and payments are authorized - Ensure that different people are involved in the process of buying, receiving goods, and making payments

A company received a credit memorandum for $100 from a supplier for defective product returned. Using a periodic inventory system, this transaction would be recorded with a which of the following entries:

- Debit to accounts payable - Credit to purchases & allowances

A company that uses the periodic inventory system purchases merchandise inventory for $800 plus freight of $80 from Sunday Supplier Co., with credit terms 2/10, n/30. The company will record this transaction with debits and/or credits to the following accounts:

- Debit to freight in for $80 - Debit to purchases $800 - Credit to accounts payable for $880

A company purchases merchandise for $500 plus a freight charge of $50 from a supplier, payment is due in 30 days. This transaction will be recorded with which of the following entries:

- Debit to purchases for $500 - Debit to freight in for $50 - Credit to accounts payable for $550

On May 4, Roscoe Grocery received merchandise costing $3,500 with freight charges of $200 paid by the supplier and added to the invoice, terms 2/10, n/30. Some goods were returned, and, on May 11, the supplier issued a credit memo in the amount of $400. Roscoe paid the amount due on May 14 and recorded the transaction with a debit to:

Accounts payable

A subsidiary ledger that contains a separate account for each creditor is called a(n):

Accounts payable ledger