Question 1

Which is true concerning multiple sales accounts?

Accepted Answer

The answer of Which is true concerning multiple sales accounts?
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Question 2

Bennie's Polish Palace had credit card sales of $2,000 with cost of goods sold of $800, and cash sales of $1,000 with cost of goods sold of $400. Operating expenses were $1,000. What is Bennie's gross profit?

Accepted Answer

Gross profit is calculated as total sales minus cost of goods sold. Total sales are $3,000 ($2,000 credit + $1,000 cash) and total cost of goods sold is $1,200 ($800 credit + $400 cash). Thus, gross profit is $3,000 - $1,200 = $1,800.

Question 3

Sales revenue less cost of goods sold is called

Accepted Answer

Sales revenue less cost of goods sold is called gross profit.

Question 4

Driftless Market has total receipts of $53,000, which include sales tax of 6%. Driftless should record

Accepted Answer

The sales tax is 6% of the total receipts, so the sales tax amount is $53,000 / 1.06 * 0.06 = $3,000. This should be recorded as Sales Taxes Payable.

Question 5

In a perpetual inventory system, cost of goods sold is recorded

Accepted Answer

In a perpetual inventory system, cost of goods sold is recorded with each sale, as each sale affects the inventory balance and the cost of goods sold. This allows for more accurate and up-to-date tracking of inventory and cost of goods sold.

Question 6

When the seller records a sales return, two journal entries are required.

Accepted Answer

One journal entry will be to record the return of the merchandise and the other entry will be to reverse the sale that was previously recorded.

Question 7

Which is true concerning recording cash sales and credit sales?

Accepted Answer

Both cash and credit sales require two entries: one to record the sale and another to record the cost of goods sold. The difference lies in the account debited for the sales revenue entry: Cash for cash sales and Accounts Receivable for credit sales.

Question 8

Which is not one of the three parties involved when national credit cards are used in retail sales?

Accepted Answer

The three parties involved in national credit card transactions are the credit card issuer, retailer, and customer. The supplier is not directly involved in the transaction, as they are only providing the goods or services to the retailer.

Question 9

If both the seller uses a perpetual inventory systems, the seller credits Sales Discounts when payment is remitted within the discount period.

Accepted Answer

In a perpetual inventory system, the seller credits the "Accounts Receivable" account when payment is received within the discount period, not "Sales Discounts." "Sales Discounts" is a contra-revenue account used to record discounts given, but it is not credited in this context.

Question 10

When the seller grants a sales allowance, two journal entries are required.

Accepted Answer

A sales allowance typically requires only one journal entry to adjust the sales revenue and accounts receivable or cash.

Question 11

Sales Returns and Allowances is credited when the seller grants an allowance to a customer.

Accepted Answer

Sales Returns and Allowances is debited when the seller grants an allowance to a customer, as it reduces the revenue.

Question 12

A sales invoice provides evidence of

Accepted Answer

A sales invoice is typically used for credit sales, where the customer will make payment at a later date rather than at the time of the sale. Therefore, option C is the most appropriate answer as it refers to a credit sale. Options A and B do not necessarily require a sales invoice, as they could involve immediate payment at the time of sale. Option D is too broad and does not provide a specific answer.

Question 13

The seller credits Sales Discounts when the purchaser remits payment within the discount period.

Accepted Answer

The answer of The seller credits Sales Discounts when the...

Question 14

The purchaser of merchandise debits Sales Discounts when payment is remitted within the discount period.

Accepted Answer

The purchaser of merchandise would debit Accounts Payable and credit Cash and Inventory (or Purchases Discounts) when payment is remitted within the discount period, not Sales Discounts. Sales Discounts is used by the seller.

Question 15

The entries to record a cash sale require all of the following except

Accepted Answer

A cash sale does not involve Accounts Receivable, as the payment is received immediately in cash.

Question 16

The entries to record a credit sale require all of the following except

Accepted Answer

A credit sale means that the customer is buying on credit, so the company is not receiving cash at the time of the sale. Therefore, there should not be a debit to Cash. The other three choices are all necessary to properly record a credit sale: a debit to Accounts Receivable to show that the company is owed money by the customer, a credit to Inventory to reduce the amount of inventory on hand, and a debit to Cost of Goods Sold to recognize the expense of producing the goods sold.

Question 17

Josh Borke buys $700 of sports equipment from Get Moving Sports using his VISA Chase Credit Card. Chase charges a service fee of 3%. Get Moving Sports' journal entry includes a

Accepted Answer

Get Moving Sports will record a service charge expense of 3% of $700, which is $21, as a debit to Service Charge Expense.

Question 18

If the seller pays freight charges to have goods delivered to a customer, it would

Accepted Answer

If the seller pays freight charges to have goods delivered to a customer, it would debit the amount to Freight-Out or Delivery Expense. This is because freight-out or delivery expense is a cost incurred by the seller to get the goods delivered to the customer and is therefore classified as a selling expense rather than a cost of goods sold.

Question 19

Recording a credit sale requires

Accepted Answer

Recording a credit sale requires two entries: one to record the sale (debit Accounts Receivable and credit Sales Revenue) and another to record the cost of goods sold (debit Cost of Goods Sold and credit Inventory).

Question 20

Recording a cash sale requires

Accepted Answer

Recording a cash sale requires two entries: one to record the revenue (debit Cash and credit Sales Revenue) and another to record the cost of goods sold (debit Cost of Goods Sold and credit Inventory).

Quiz 8: Merchandising Companies: Sales Perpetual