Payment of $99 for merchandise sold

1.       Payment of $99 for merchandise sold on credit for $100 subject to 1/10 n/30 was received within the discount period. This was recorded with a debit to Sales Discounts for $1, a debit to Cash for $99, and a credit to Accounts Receivable for $100, but no mention was made of the subsidiary ledger account. This error will cause the

A. net income for the period to be overstated.        

B. net income for the period to be understated.     

C. control account to not agree with the subsidiary ledger.               

D. assets to be overstated.               

2.       The principal ledger containing all the balance sheet and income statement accounts is the _______ ledger.

A. general 

B. creditors’             

C. customers’          

D. subsidiary            

3.       A Sold Merchandise for Cash subject to a sales tax accepting cash will be recorded with a

A. credit to an asset account.           

B. debit to a liability account.            

C. debit to Capital. 

D. None of the above          

4.       Kristi’s Pottery sold 200 tiles at $25.00 each to a charge customer, terms 1/10, n/30. Which entry is required to record this transaction?

A. Debit Cash $5,000; credit Tile Sales $5,000             

B. Debit Accounts Receivable $4,050; credit Tile Sales $4,050              

C. Debit Accounts Receivable $4,050; debit Sales Discount $50.00; credit Tile Sales $5,000     

D. Debit Accounts Receivable $5,000; credit Tile Sales $5,000           

5.       Determine the amount to be paid within the discount period for a previous sale with an invoice price of $10,000, subject to credit terms of 1/10, n/30.

 

A. $5,000.00             

B. $9,500.00              

C. $10,000.00           

D. $9,900.00             

Calculation = xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

6.       When using a subsidiary ledger, the Accounts Receivable account in the general ledger is called the _______ account.

A. master  

B. subsidiary            

C. receivable            

D. controlling           

7.       Determine the amount of cash collected at the time of making a sale of $1,000 worth of merchandise subject to a 6% sales tax.

A. $1,000.00             

B. $1,030.00              

C. $1,060.00              

D. $1,090.00             

Calculation:

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8.       If a credit memorandum is issued, which account will be increased on the seller’s books?

A. Accounts Receivable       

B. Accounts Payable             

C. Sales Discount    

D. Sales Returns and Allowances   

9.       The collection on an account within the 1/10 n/30 discount period was recorded using a 10% discount rather than a 1% discount in both the controlling and subsidiary accounts. This error will cause the

A. the net income for the period to be understated.            

B. the net income for the period to be overstated.

C. the control account to not agree with the subsidiary ledger.         

D. the assets to be overstated.       

10.   Which statement about subsidiary ledgers is most accurate?

A. The subsidiary ledger accounts will never equal the control account in the general ledger.             

B. The Accounts Receivable subsidiary ledger is a book of accounts that provides supporting detail for Accounts Receivable.              

C. The subsidiary ledger accounts will equal the amount in the Sales account.           

D. All of the above

11.   If a credit memorandum is issued, which account will be decreased on the seller’s books?

A. Accounts Receivable      

B. Accounts Payable             

C. Sales Discount    

D. Sales Returns and Allowances    

12.   A characteristic of a schedule of Accounts Receivable is that

A. it contains a list of customers’ names with balances.        

B. the total is equal to the Accounts Receivable control account at the end of the month.   

C. it’s prepared at the end of the month.   

D. All of the above

13.   Sue’s Jewelry sold 30 necklaces for $25 each to a credit customer. The invoice included a 6% sales tax and payment terms of 2/10, n/30. Five necklaces were returned prior to payment. The entry to record the return would include a

A. debit to Sales Returns and Allowances for $132.50.           

B. debit to Sales Returns and Allowances for $125.00.          

C. credit to Sales Tax Payable for $7.50.       

D. debit to Accounts Receivable for $132.50.             

Calculation:

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14.   Entries to customers’ accounts for sales are posted in the _______ subsidiary ledger.

A. Accounts Receivable      

B. Accounts Payable             

C. Fixed Asset         

D. Cash       

15.   The normal balance of the Accounts Receivable subsidiary ledger is

A. credit.   

B. debit.    

C. It doesn’t have a normal balance.             

D. Not enough information has been provided.       

16.   Unlimited Materials sold goods for $2,000 plus 6% sales tax to a charge customer, terms n/30. Which entry is required to record this transaction?

A. Debit Accounts Receivable $2,120; credit Sales Tax Payable $120; credit Sales $2,000      

B. Debit Cash $2,000; credit Sales $2,000      

C. Debit Accounts Receivable $2,000; credit Sales $2,000      

D. Debit Accounts Receivable $2,120; credit Sales $2,120     

17.   A received payment within the discount period for previously merchandise sold will be recorded with a

A. credit to an asset account.           

B. debit to a liability account.            

C. debit to Capital. 

D. None of the above          

18.   Determine the amount of cash collected on a credit sale in the amount of $4,500 and subject to a 6% sales tax when $500 worth of merchandise has already been returned for credit.

 

A. $4,240.00             

B. $4,500.00              

C. $4,000.00              

D. $3,860.00             

Calculation:

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19.   Zach returned $200 of merchandise to Secret Trails. His original purchase was $400, with terms 1/10, n/30. If Justin pays the balance of his account after the discount period, how much should he pay?

A. $204.00 

B. $196.00 

C. $200.00 

D. $400.00 

20.   A checkmark in the PR column in the general journal means the

A. entry was recorded correctly.     

B. amount was posted to the controlling account.  

C. amount was recorded in the subsidiary ledger. 

D. entry was audited.          

 

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