Chapter7
A company issues a credit memorandum to a customer for returned merchandise. The merchandise was originally sold for $200 plus a sales tax of 5%. What is the amount of the credit memorandum?
$210
A company that buys $4,000 of goods from a wholesaler offering trade discounts of 20 and 10 percent will pay what amount for the goods?
2,880
If a business has sales of $252,000 and $3,000 of sales returns and allowances, what is the amount of net sales?
249,000
Sales to charge-account customers are recorded with a debit to:
AR
Which document is necessary to prepare the schedule of accounts receivable?
Accounts receivable subsidiary ledger
Which of the following general ledger accounts would appear in a sales returns and allowances journal?
Sales Returns and Allowances, Sales Tax Payable, Accounts Receivable
What account is used to record sales tax owed by a business to a city or state?
Sales Tax Payable
True or false: The accounts receivable account is a control account for the subsidiary ledger.
T
Which of the following is true concerning the accounts receivable ledger?
The accounts receivable ledger contains individual balances of amounts owed by credit customers.
Which of the following is not true concerning a sales allowance?
The customer must return the damaged merchandise.
Examples of subsidiary ledgers include which of the following:
accounts payable accounts receivable
Sales taxes imposed by cities and states are _____ _____ the retail price of merchandise.
added to
A reduction in the price originally charged to customers for goods or services is called a sales
allowence
Which of the following are common types of credit sales?
bank credit cards business credit cards open-account credit
A bank credit card sale will be recorded with a debit to which account:
cash
A remittance of sale tax is recorded with a debit to:
cash
Sales returns and allowances is a ______ revenue account and has a normal (debit/credit) _______ balance.
contra debit
Which of the following is not a special journal?
contra sales journal
An account whose balance summarizes the balances of its related accounts in the subsidiary ledger is called a ________ account.
control
Which of the following is not recorded in an accounts receivable subsidiary ledger?
credit amounts for sales and sales tax payable
An accounts receivable ledger is used to provide detailed information related to
credit customers
A note verifying that a customer's account is being reduced by the amount of a sales return or sales allowance plus any sales tax that may have been involved is called a
credit memorandum
Where is net sales reported?
income statement
Which of the following is not a reason to use a sales journal?
increases credit sales
An accounting term for a document that refers to a customer billing for merchandise bought on credit is called a(n)
invoice
What is the proper classification of the Sales Tax Payable account?
liability
The established retail price is known as the ______ price.
list
After remitting sales tax, a small remaining balance in the sales tax payable account is recorded as a credit to:
miscellaneous income
A business manager uses information concerning the sales returns and allowances given to customers to determine
operating efficiency
What type of transaction is recorded in the sales journal?
sale of merchandise on account
Examples of special journals, used to record only one type of transaction
sales cash receipts purchases
A special journal that is intended only for credit sales is called a
sales journal
If a small balance remains in the Sales Tax Payable account after paying the tax authority, a journal entry is made to debit:
sales tax payable
Types of business operations are
service, merchandising, and manufacturing.
A journal that is used to record only one type of transaction, such as a sales journal or a cash receipts journal is called a ----------------- journal.
special
A ledger that contains accounts of a single type, such as an account receivable ledgers for each customer, is known as a ___________ ledger.
subsidiary
The schedule of accounts receivable lists the account balances from the:
subsidiary ledger
The sales journal records which of the following:
the amount of the debit(s) the amount of the credit(s) customer's account or name
Which of the following are true regarding posting from the sales journal to the general ledger.
the equality of the debits and credits should be proved prior to posting
A discount offered to customers based on volume is known as a ________ discount.
trade
A manufacturer or wholesaler that sells goods to retailers is called a
wholesale business
