Deck 7: Accounting for Sales and Accounts Receivable

Question 1

A ledger that contains accounts of a single type is called a(n)____________________ ledger.

Answer 1

subsidiary

Question 2

The entry to record a sale of merchandise on credit that is subject to sales tax includes a(n)____________________ to Sales Tax Payable.

Answer 2

credit

Question 3

In some states,a firm receives a discount for paying the amount of sales tax due on time.

Answer 3

True

Question 4

A merchandising business sells goods that it produces.

Question 5

Sales Tax Payable is classified as a(n)____________________ account.

Question 6

The abbreviation S1 in the Posting Reference column of an account shows that the data was posted from page 1 of the sales journal.

Question 7

The individual amounts in the Accounts Receivable Debit column of a sales journal should be posted to the accounts receivable subsidiary ledger,and the column total should be posted to the Accounts Receivable account in the general ledger.

Question 8

The ____________________ ledger contains accounts for credit customers.

Question 9

To indicate that the column totals of the sales journal have been posted,a check mark is entered under the column total.

Question 10

A(n)____________________ journal is a journal that is used to record only one type of transaction.

Question 11

A(n)____________________ business sells goods that it purchases in finished form for resale.

Question 12

A business that sells goods and services directly to individual consumers is called a(n)____________________ business.

Question 13

The stock of goods kept on hand to sell to consumers is called ________________________.

Question 14

When a business makes a sale on a bank credit card,the business is ultimately responsible for collecting the amount owed from the customer.

Question 15

The balance of the Sales Returns and Allowances account is subtracted from the balance of the Accounts Receivable account in the Assets section of the balance sheet.

Question 16

After all postings have been made,the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger.

Question 17

A customer who returns goods or receives an allowance is entitled to a credit for the appropriate amount of sales tax if tax was charged on the original sale.

Question 18

To indicate that an amount has been posted from the sales journal to the accounts receivable subsidiary ledger,a(n)____________________ is placed in the Posting Reference column of the journal.

Question 19

A sales return or a sales allowance is usually recorded in the sales journal.

Question 20

The Sales Returns and Allowances account has a normal debit balance.

Question 21

The Sales account is classified as a(n)

A) asset account.
B) liability account.
C) revenue account.
D) expense account.

Question 22

The reductions from list prices that many wholesale businesses offer their customers are called ____________________ discounts.

Question 23

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) a debit to Accounts Receivable of $10,700.
B) a debit to Accounts Receivable of $10,000.
C) a credit to Sales of $10,700.
D) a debit to Sales Tax Payable of $700.

Question 24

To find the balance due from an individual customer,the accountant would refer to

A) the sales journal.
B) the Sales account in the general ledger.
C) the accounts receivable subsidiary ledger.
D) the Accounts Receivable account in the general ledger.

Question 25

ABC Company uses special journals.When making a credit sale of $700 to a customer,the company would record the sale by:

A) entering $700 in the Accounts Receivable Debit column and $700 in the Sales Credit column of the sales journal.
B) entering $700 in the Accounts Receivable Credit column and $700 in the Sales Debit column of the sales journal.
C) entering $700 in the Accounts Payable Credit column and $700 in the Sales Credit column of the sales journal.
D) entering $700 in the Sales Returns and Allowances Debit column and $700 in the Sales Credit column of the general journal.

Question 26

In a sales journal used to record taxable sales,the total of the Accounts Receivable column should equal

A) the sum of the totals of the Sales Tax Payable column and the Sales column.
B) the difference between the total of the Sales Tax Payable column and the total of the Sales column.
C) the total of the Sales column.
D) the total of the Sales Tax Payable column.

Question 27

Which of the following statements is correct?

A) The sales journal is used for recording both cash sales and credit sales.
B) Since the sales journal is used for a single purpose,there is no need to enter any descriptions.
C) To provide an adequate audit trail,sales on credit should be recorded in both the sales journal and the general journal.
D) The complete information for each sale of merchandise on credit can be recorded on one line of the general journal.

Question 28

Identify the statement below that correctly describes the Sales Returns and Allowances account.

A) It is an expense account.
B) It is a liability account.
C) It normally has a credit balance.
D) It normally has a debit balance.

Question 29

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

A) cash payments journal.
B) cash receipts journal.
C) purchases journal.
D) general journal.

Question 30

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

A) cash payments journal.
B) cash receipts journal.
C) sales journal.
D) purchases journal.

Question 31

The Sales account is classified as

A) a liability account.
B) an asset account.
C) a contra account.
D) a revenue account.

Question 32

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

A) cash payments journal.
B) cash receipts journal.
C) sales journal.
D) purchases journal.

Question 33

Which of the following statements is not correct?

A) Postings to the accounts receivable subsidiary ledger are usually made once a month on the last day of the month.
B) Before any posting to the subsidiary ledger takes place,the equality of the debits and credits recorded in the sales journal are proved by comparing the column totals.
C) Before any posting to the general ledger takes place,the equality of the debits and credits recorded in the sales journal are proved by comparing the column totals.
D) When special journals are used,postings to the accounts receivable account in the general ledger are usually made once a month on the last day of the month.

Question 34

In a firm that uses special journals,the acceptance of a return of merchandise from a credit customer is recorded in the

A) cash receipts journal.
B) sales journal.
C) cash payments journal.
D) general journal.

Question 35

Which of the following statements is not correct?

A) Use of a sales journal eliminates repetition in posting individual entries to the Accounts Receivable account in the general ledger.
B) A journal that is used to record only one type of a transaction is called a special journal.
C) The sales slip is the source document for sales on credit transactions.
D) If the firm must collect sales tax on retail transactions,the sales journal should have a Sales Tax Payable Debit column.

Question 36

Merchandise is sold on credit for $600 plus 5 percent sales tax.The entry in the sales journal will include a debit to Accounts Receivable for

A) $600.00.
B) $603.50.
C) $605.50.
D) $630.00.

Question 37

A list of all unpaid balances in the accounts receivable subsidiary ledger is called a(n)____________________ of accounts receivable.

Question 38

When an accounts receivable subsidiary ledger is used,the Accounts Receivable account in the general ledger is considered to be a(n)____________________ account.

Question 39

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

A) service business.
B) merchandising business.
C) manufacturing business.
D) non-profit business.

Question 40

The Sales Returns and Allowances account has a normal ____________________ balance.

Question 41

The Sales Returns and Allowances account is classified as

A) an asset account.
B) a contra asset account.
C) an expense account.
D) a contra revenue account.

Question 42

If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000,its net sales were

A) $54,000.
B) $50,000.
C) $46,000.
D) $4,000.

Question 43

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

A) $560.
B) $630.
C) $700.
D) $770.

Question 44

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

A) a debit to Sales and a credit to Accounts Receivable.
B) a debit to Sales and a credit to Sales Returns and Allowances.
C) a debit to Sales Returns and Allowances and a credit to Accounts Receivable.
D) a debit to Accounts Receivable and a credit to Sales Returns and Allowances.

Question 45

An example of a merchandising company is a

A) bookstore.
B) restaurant.
C) hair salon.
D) real estate office.

Question 46

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

A) $2,250.00.
B) $2,092.50.
C) $2,452.50.
D) $2,362.00.

Question 47

A wholesale business sells goods with a list price of $900 and a trade discount of 40 percent.The net price is

A) $360.00.
B) $540.00.
C) $900.00.
D) $940.00.

Question 48

Hugh Snow returned merchandise to Farley Co.The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a:

A) Debit Accounts Payable
B) Credit to Purchase Returns and Allowances
C) Debit to Account Receivable
D) Debit Sales Returns and Allowances

Question 49

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 credit to Sales for

A) $2,250.00.
B) $2,092.50.
C) $2,452.50.
D) $2,362.00.

Question 50

On Deck Sports Memorabilia store sells a Babe Ruth rookie card for $4,600 on account.If the sales tax on the sale is 8%,what is the amount debited to Accounts Receivable.

A) $4,232
B) $4,968
C) $4,600
D) $4,592

Question 51

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:

A)

B)

C)

D)

Question 52

Which of the following describes Sales Tax Payable?

A) A revenue account with a normal credit balance.
B) A liability account with a normal debit balance.
C) A liability account with a normal credit balance.
D) An asset account with a normal debit balance.

Question 53

The Sales Returns and Allowances account is presented

A) on the balance sheet as a deduction from Accounts Receivable.
B) on the income statement as a deduction from Sales.
C) on the income statement as an addition to Sales.
D) on the balance sheet as a deduction from Capital.

Question 54

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.

A) Invoice price will be equal to $956.25
B) Invoice price will be equal to $900
C) Invoice price will be equal to $600
D) Invoice price will be equal to $543.75

Question 55

If a firm does not have a sales returns and allowances journal,the entries for these transactions are made in

A) the sales journal.
B) the general journal.
C) the cash receipts journal.
D) the cash payments journal.

Question 56

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) A debit of $43 would be posted to the customer's account in the accounts receivable ledger.
B) A debit of $40 would be posted to the customer's account in the accounts receivable ledger.
C) A credit of $40 would be posted to the customer's account in the accounts receivable ledger.
D) A credit of $43 would be posted to the customer's account in the accounts receivable ledger.

Question 57

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

A) increasing total revenue.
B) increasing total expenses.
C) decreasing total revenue.
D) decreasing total expenses.

Question 58

The amount used by wholesalers to record sales in its sales journal is

A) the retail price.
B) the list price.
C) the net price.
D) the original price.

Question 59

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

A) the balance of the Sales account.
B) the total of the Accounts Receivable Debit column in the sales journal.
C) the balance of the Accounts Receivable account in the general ledger.
D) the total of all sales on account for the accounting period.

Question 60

GiGi's Sporting Goods uses special journals.If a credit customer returns $400 of goods on which $24 of sales tax was charged,the journal entry to record the return would include:

A) a debit to the Sales account for $424.
B) a credit to the Sales Tax Payable account for $24.
C) a debit to the Sales Returns and Allowances account for $400.
D) a credit to the Accounts Receivable account for $400.

Question 61

Which of the following describes Sales Returns and Allowances?

A) A revenue account with a normal credit balance.
B) An expense account with a normal debit balance.
C) A contra revenue account with a normal debit balance.
D) A contra expense account with a normal credit balance.

Question 62

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

A) $9,275.00.
B) $8,225.00.
C) $8,750.00.
D) $8,462.00.

Question 63

The sales journal for Carothers Company is shown below.Describe how the amounts would be posted to the general ledger accounts.

Question 64

All That Jazz Music Store had the following transactions during the month of August 2016.Record the transactions on page 15 of a sales journal and page 18 of a general journal.Total,prove,and rule the sales journal as of August 31.

Question 65

Barnett's Electronics Store had the following transactions during the month of January 2016.Record the transactions on page 1 of a sales journal and page 1 of a general journal.Total,prove,and rule the sales journal as of January 31.

Question 66

JCPenney issues its own credit cards to its customers who have established credit with them.It's customers used these cards to charge $300 worth of sales.JCPenney would record these sales by:

A) debiting Cash $300 and crediting Sales $300.
B) debiting Sales $300 and crediting Accounts Receivable $300.
C) debiting Charge Card Sales $300 and crediting Sales Returns and Allowances $300.
D) debiting Accounts Receivable $300 and crediting Sales $300.

Question 67

Selected balances from the general ledger of the Loren Company on March 31,2016,are listed below.Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended March 31,2016.

Question 68

The accounts receivable ledger for Acme Auto Parts is shown below.Prepare a schedule of accounts receivable as of March 31,2016.

Question 69

One of the customer accounts from the accounts receivable ledger for Toulouse Company is shown below.Explain each of the entries that have been posted to this customer's subsidiary ledger account.

Question 70

The amount of the trade discount taken by the customer is recorded as a(n)

A) asset.
B) liability.
C) expense.
D) sales recorded net of trade discounts.

Question 71

One of the customer accounts from the accounts receivable ledger for Rogers Flooring is shown below.Explain each of the entries that have been posted to this customer's subsidiary ledger account.

Question 72

Bradley's Appliance Store had the following transactions during the month of May 2016.Record the transactions on page 5 of a sales journal and page 8 of a general journal.Total,prove,and rule the sales journal as of May 31.

Question 73

Selected balances from the general ledger of the All Star Video Rentals on July 31,2016,are listed below.Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended July 31,2016.

Question 74

The sales journal for Simon Company is shown below.Describe how the amounts would be posted to the accounts receivable subsidiary ledger accounts.

Question 75

Selected balances from the general ledger of the Valley Video Rentals on May 31,2016,are listed below.Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended May 31,2016.

Question 76

One of the customer accounts from the accounts receivable ledger for Paragon Consulting Services is shown below.Explain each of the entries that have been posted to this customer's subsidiary ledger account.