Chapter 7 & 8 Principles of Accounting Homework

Ables Budget Boutique uses special journals. If a credit customer returns $40 of goods on which $3 of sales tax was charged, identify the statement below that would be correct when posting the transaction.

A debit of $43 would be posted to the customer's account in the accounts receivable ledger. X

Which of the following describes Sales Tax Payable?

A liability account with a normal credit balance.

Music, Inc. uses a periodic inventory system when recording its purchases and sales of inventory. If the business returns $1,000 of damaged goods to its supplier, select the correct entry to record the return:

Accounts payable.............$1000 Purchase returns and allowances ..........$1000

Which of the following statements is correct?

Another name that may be used for the Freight In account is "Transportation In."

A wholesale firm made sales with a list price of $1,500 and trade discounts of 25 and 15 percent. Calculate the amount the firm will use to record the sale in the sales journal.

Invoice price will be equal to $600 X

The Sales account is classified as a(n)

revenue account.

In a firm that uses special journals, an allowance given for damaged merchandise is recorded in the

general journal.

Check marks next to the individual amounts in the purchases journal mean that the amounts

have been posted to the accounts payable subsidiary ledger.

In a firm that uses special journals, a sale of merchandise on credit is recorded in the

sales journal.

Freight charges on merchandise purchases should be debited to

the Freight In account.

After all postings have been made, the total of the schedule of accounts receivable should equal

the balance of the Accounts Receivable account in the general ledger.

Credit purchases of supplies that are to be used in the business are entered in

the general journal.

Purchases of merchandise on credit should be recorded in

the purchases journal.

Which of the following describes Sales Returns and Allowances?

A contra revenue account with a normal debit balance.

In a firm that uses special journals, the purchase of merchandise for cash is recorded in the

cash payments journal.

In May, a retailer recorded credit sales of $10,000. Assuming the sales tax rate is 7 percent, the entry to record the sales in the sales journal would include:

a debit to Accounts Receivable of $10,700.

Bally Boutique uses a perpetual inventory system when recording its purchases and sales of inventory. The business sells $6,000 of goods to charge account customers and the goods originally cost Bally, $3000. The entry to record the sale would include:

a debit to Cost of Goods Sold for $3,000 and a credit to Merchandise Inventory for $3,000

The entry to record a return by a credit customer of defective merchandise on which no sales tax was charged includes

a debit to Sales Returns and Allowances and a credit to Accounts Receivable.

On the Income Statement, Sales Returns and Allowances have the effect of

decreasing total revenue.

Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for

$2,250.00. X

A creditor's account in the accounts payable ledger has a $1,600 beginning balance. After a transaction for $700 is posted from the purchases journal, the balance of the creditor's account is

$2,300 credit.

A creditor's account in the accounts payable ledger has a balance of $10,560 as of April 1. After a transaction of $12,800 is posted from the purchases journal and a transaction of $9,200 is posted from the cash payments journal, the balance of the creditor's account on April 30 is:

$14,160 credit

A firm had purchases of $16,200, freight charges of $300, and purchases returns and allowances of $1,100 during one month. Its net delivered cost of purchases was

$15,400.

A retailer recorded the following in June: cash sales $2,000; credit sales, $9,000; sales returns and allowances, $1,000. Assuming the sales tax rate is 7 percent, the entry to record the sales tax payment includes a debit to Sales Tax Payable for

$700

Kay Sadia sold merchandise for $8,750 subject to a 6% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for

$9,275.00.

Which of the following statements is not correct?

A credit purchase of equipment for use in the business would be recorded in the purchases journal.

For good internal control of purchases, businesses should do all of the following except:

For good internal control of purchases, businesses should do all of the following except:

Which of the following statements is not correct?

Postings to the accounts receivable subsidiary ledger are usually made once a month on the last day of the month. A credit purchase of equipment for use in the business would be recorded in the purchases journal.

Which of the following accounts has a normal debit balance?

Purchases

ABC Skiing Essentials uses special journals. If a credit customer returns $8,000 of goods on which $560 of sales tax was charged, select the correct entry to record the return:

Sales returns and allowances....................$8,000 Sales tax payable............................$560 Accounts receivable...............$8,560

Which of the following statements is correct?

Since the sales journal is used for a single purpose, there is no need to enter any descriptions.

After a supplier of merchandise is selected, the purchasing department issues a form called

a purchase order.

In a firm that uses special journals, the sale of merchandise for cash is recorded in the

cash receipts journal.

To record a return of merchandise purchased on credit on the books of the buyer, the accountant would

debit Accounts Payable and credit Purchases Returns and Allowances.

Best Value Furniture uses the periodic inventory system to account for its inventory. It purchased $2,000 of goods from its supplier but later returned $400 of the goods due to damage. Best Value would record the return by:

debiting Accounts Payable, crediting Purchases Purchase Returns and Allowances

A firm that sells goods that it purchases for re-sale is a

merchandising business

The Sales Returns and Allowances account is presented

on the income statement as a deduction from Sales.

In a firm that uses special journals, the purchase of merchandise for $2,800, payable in 30 days, plus a freight charge of $140 is recorded in the

purchases journal.

In a firm that uses special journals, the purchase of merchandise with terms of 2/10, n/30 is recorded in the

purchases journal.