BA 111 Chapter 10

XYZ Company buys a $10,000 tractor from Tractor USA In's. And is granted 30 days to pay. XYZ accountants maintain an accounts payable subsidiary ledger. Which of the following is true regarding the transaction?

$10,000 would be immediately credited to Accounts Payable, Tractor USA When a subsidiary ledger is used to keep track of vendor payables, the subsidiary ledger is credited upon the purchases of any item on account.

Under a perpetual inventory system, a company pays its supplier, within the discount period, for a previous purchase on account. The purchase was for $5,000 and the discount was $100. Which of the following would be credit entry in the company's general journal as a result of this transaction?

$100 credit to inventory Under a perpetual inventory system, the discount is credited to the inventory account.

The accounts payable for a company has a month end balance of $500. During the month, the company bought $750 of merchandise on account and received a $200 bill for utilities. There was also a $1,000 payment made non the account. WHat was the beginning balance?

$550 (credit) The account increased by $950 ($750 + $200) and decreased by $1,000 which would result in a net debit of $50 The end the period with the $500 (credit) balance given, the beginning balance would need to be $550.

On March 4, John purchased $700 of merchandise on account from Larsen's Accessories, terms 2/10, n/30. The goods were shipped F.O.zzz destination. The freight changes was $50. The amount to be recorded in the accounts Payable Subsidiary ledger is:

700 The amount to be recorded in the Accounts Payable Subsidiary ledger is $700, since the goods were shipped FOB destination the seller is responsible for paying the freight.

Returned merchandise for credit on account. How will this be recorded under a perpetual inventory system?

A debit to a liability ad a credit to an asset This will be recorded as a debit to a liability and a credit to an asset. The reduction in cost rom the return is recorded directly into the Merchandise Inventory account.

The accounts payable subsidiary ledger should be posted to when:

A purchase is made on credit or a payment is made to a vendor When a subsidiary ledger is used to keep track of vendor payables, the subsidiary ledger is credited upon the purchase of ay item on account and upon payment to a vendor for an amount that is owed.

A characteristic of Merchandise Inventory is:

All of the above are correct (it decreases for the buyer when merchandise is returned, it is an asset, it has a normal debit balance.)

The recording of freight-in owed under the perpetual inventory system would include:

Credit to accounts payable When a perpetual inventory system is sued, freight-in is recorded as a debit to inventory and a credit to cash or accounts payable.

The recording of the cost of freight- in owed under the perpetual inventory system would include:

Credit to accounts payable When a perpetual inventory system is sued, freight-in is recorded as a debit to inventory and a credit to cash or accounts payable.

Which of the following would properly record a $10 discount on a $1,000 purchase if the vendor is paid within the discount period and a perpetual inventory system is used?

Debit $1,000 Account Payable Credit $990 Cash Credit $10 Inventory Under a perpetual inventory system, the discount is credited to the inventory account.

A debit memo is issued as a result of a buyer returning $500 of merchandise. Which of the following would be the correct journal entry in a perpetual inventory system?

Debit Account Payable $500 Credit Inventory $500 A debit memo is issued by a purchaser to a seller, indicating the purchaser has returned goods and needs to have their account balance reduced.

A debit memo is issued as a result of a buyer returning $500 of merchandise. Which of the following would be the correct journal entry in a perpetual inventory system?

Debit Accounts Payable $500 Credit Inventory $500 A debit memo is issued by a purchaser to a seller, indicating the purchaser has returned goods and needs to have their account balance reduced.

Which document would trigger the following entry for a company that returned $600 of goods that it had purchased on credit?

Debit Accounts Payable $600 Credit Inventory $600 A debit memo is issued by a purchaser to a seller, indicating he purchaser has returned goods and needs to have their account balance reduced.

The return of merchandise to the supplier for credit using the perpetual inventory system would include a:

Debit to Accounts Payable and a credit to Merchandise Inventory. The return of merchandise to the supplier for credit using the perpetual inventory system would include a Debit to Account Payable and a credit to Merchandise Inventory. An inventory system that keeps continual track of each type of inventory units on hand at the beginning of each accounting period, units sold, and the surrender balance after each sale or purchase.

The entry to record a payment on accounts payable with a $1,550 account balance (within the 3% discount period) would include a:

Debit to Accounts Payable for $1,550 Accounts Payable must be credited for the full amount of the original obligation.

The entry to record a payment on a $850 account within the 2% discount period would include a:

Debit to Accounts Payable for $850 Accounts Payable would be debited for $850. Purchases discount would be credited for $17, and cash would also be credited for $833.

The recording of the cost of freight-in under the perpetual inventory system would include a:

Debit to Merchandise Inventory When the purchaser is responsible for cost of freight, it is added to the cost of merchandise inventory. If the cost of freight is paid by the seller, it could be recorded in an operating expense account called Freight-Out.

The recording of the cost of freight-in under perpetual inventory system would include a:

Debit to Merchandise Inventory When the purchaser is responsible for cost of freight, it is added to the cost of merchandise inventory. If the cost of freight is paid by the seller, it could be recorded in an operating expense count called Freight-Out.

A retailer that utilized a perpetual inventory system returns merchandise purchased on account. What is the impact on the accounting equation of such a transaction?

Decrease in a liability and a decease in an asset This will be recorded as a debit (decrease) to a liability and a credit 9decreased) to an asset, The reduction in cost from the return is recorded directly into the Merchandise Inventory account.

Which of the following terms means that the seller pays the freight charges?

F.O.B destination When goods are shipped F.O.B destination, the seller pays or is responsible for the cost of freight to purchaser's location or destination and title to the goods pass when the goods reach their destination.

The term used when the seller is responsible for the cost of freight is:

F.O.B destination. When goods are shipped F.O.B destination, the seller pays or is responsible for the cost of freight to purchaser's location or destination.

Sports "R"Us bought some new equipment for its sports line and required to pay the freight cost. The freight terms are:

F.O.B shipping point When items are shipped F.O.B. Shipping point, the purchaser pays or is responsible for the shipping cost from seller's shipping point to purchaser's location,

A company that utilizes a periodic inventory system incurs a $750 shipping charge when it receives a delivery of merchandise, which of the following accounts would be debited?

Freight-in In a periodic system, the cost incurred by the buyer for shipping of inventory from the seller's place of business is debited to an account called Freight-In.

In a perpetual inventory system, a company pays transportation costs of $90 (F.O.B shipping Point) to acquire merchandise. Which of the following accounts would be debited by $90?

Inventory Wheb the buyer is responsible for the costs of shipping, F.O.B shipping point, those costs will flow through the inventory account as an addition, or debit, to the inventory account.

In the general journal, there is a record of a purchase of inventory on account from a company named Benny's Inc. In the PR column, there is the number 211 and a check mark, what does the "211" mark dignify?

It is the account number for the general ledger accounts payable account and it documents the posting to that account. The PR column documents the posting of a journal entry. The number reference is the general ledger account posting while the check mark signifies that4 the posting was made to the subsidiary ledger.

In a periodic inventory system, a company debits freight-in for a $500 shipping charge. What account would be debited if a perpetual system is used?

Merchandise Inventory In a perpetual inventory system, the cost of shipping that the buyer incurs for inventory is added to the inventory account instead of keeping it separate as is the case with a periodic system.

A business form to document that the ordered goods were received, the quantity received and the specific condition of the goods is called:

Receiving report A receiving report is a business from used to notify the appropriate people of the ordered goods received along with the quantities and specific condition of the goods.

In the general journal, there is a record of a purchase of inventory on account from a company named Abby Road Inc. In the PR column, there is the number 211 and a check mark, what does the check mark signify?

The credit was posted to the accounts payable (subsidiary account) for Abby Road Inc. The Pr Column documents the posting of a journal entry. The number reference is the general ledger account posting while the check mark signifies that the posting was made to the subsidiary ledger.

Which of the following explains the following entry: debit to Accounts Payable and a credit to Merchandise Inventory?

The return of merchandise to the supplier for credit when a perpetual inventory system is used. The return of merchandise to the supplier for credit using the perpetual inventory system would include a Debit to Accounts Payable and a credit to Merchandise Inventory. An inventory system that Jeep's continual track of each type of inventory by recording units on hand at the beginning of each accounting period, units sold, and the current balance after each sale or purchase.

F.O.B destination means that:

The seller is responsible for the cost of freight When goods are shipped F.O.B destination, the seller pays or is responsible for the freight to purchaser's location or destination

When goods are shipped and F.O.B shipping point is used:

Title or legal ownership of shipped goods passes to the buyer when goods are shipped When goods are shipped F.O.B shipping point, the purchaser pays or is responsible for the shipping costs from seller's shipping point to purchaser's location and title to the goods pass to the buyer when goods are shipped.