Question 1

A customer purchased items on account from ABC Company. After a few days, the customer returned the goods. ABC will issue a:

Accepted Answer

When a customer returns goods purchased on account, the seller issues a credit memo to adjust the customer's account balance. This reflects the reduction of the customer's due amount.

Question 2

A debit memorandum acknowledges the receipt of returned goods from a customer.

Accepted Answer

A debit memorandum is issued by a seller to notify the buyer of a debit made to their account due to reasons such as returned goods, but it is not an acknowledgment of receipt of those goods.

Question 3

The amount of an invoice is $1,000, with terms 2/10, n30. What is the amount to be paid within the discount period?

Accepted Answer

The answer of The amount of an invoice is $1,000,...

Question 4

ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to record the payment of this invoice under a periodic system is:

Accepted Answer

The answer of ABC Corporation pays an invoice for $350...

Question 5

Prepare the period-end adjusting entries for a periodic inventory system:
Beginning Inventory $55,000
Purchases $69,000
Purchases Discounts $4,000
Purchases Returns $6,500
Transportation-in 32,000
Ending Inventory $52,000

Accepted Answer

The answer of Prepare the period-end adjusting entries for a...

Question 6

ABC Company returned $750 of goods it had purchased from another company. The original invoice was for $4,200, 3/10, n/30. What is the discount if ABC pays the balance within the discount period?

Accepted Answer

The answer of ABC Company returned $750 of goods it...

Question 7

If an invoice reads n/15, what does this mean?

Accepted Answer

The answer of If an invoice reads n/15, what does...

Question 8

A journal entry that involves more than two accounts is called a compound journal entry.

Accepted Answer

A compound journal entry involves multiple accounts, typically more than two, and is used to record more complex transactions such as adjustments for depreciation or accruals.

Question 9

Under a periodic inventory system, when goods are returned by a customer the inventory account is not adjusted.

Accepted Answer

In a periodic inventory system, the inventory account is only updated at the end of each accounting period through a physical count. Therefore, any returns made by customers during the period are not reflected in the inventory account until the end of the period.

Question 10

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account.

Accepted Answer

Sales Discounts and Sales Returns and Allowances are deductions from the Sales account, hence they are contra-accounts.

Question 11

ABC Corporation has received an invoice for $4,500 with terms of 3/15, n/50. If ABC pays the invoice on the seventeenth day, the Cash account will be credited for what value?

Accepted Answer

The answer of ABC Corporation has received an invoice for...

Question 12

An invoice of $237.50 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, what is the amount to be paid?

Accepted Answer

The answer of An invoice of $237.50 is dated April...

Question 13

Journalize the following transactions using the periodic system:
Sept. 3 Purchased $1,870 worth of inventory from Sierra Company with terms 2/10 n/30.
Sept. 9 Returned $400 worth of the inventory purchased on Sept. 3 as goods were defective.
Sept.12 Paid for the Sept. 3 purchase.
Sept.19 Purchased $900 of merchandise on account from Lola Company with Terms of 3/15, n/45.

Accepted Answer

The answer of Journalize the following transactions using the periodic...

Question 14

Journalize the following transactions using the perpetual inventory method.
Aug. 6 Purchased $830 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,611 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,743 of merchandise on account from Luis Company with Terms of 3/15, n/45.

Accepted Answer

The answer of Journalize the following transactions using the perpetual...

Question 15

Debit card and credit card sales are counted as cash transactions.

Accepted Answer

Debit card and credit card sales are considered cash transactions in accounting because they provide immediate payment to the seller, similar to receiving cash, despite the actual cash transfer occurring through electronic means.

Question 16

Cost of Goods Sold is the account that is matched with the Sales account to record the company's cost of the inventory that was sold under a perpetual inventory system.

Accepted Answer

Cost of Goods Sold is indeed the account that is used to record the company's cost of the inventory that was sold, and it is matched with the Sales account to determine the company's gross profit. This is done under a perpetual inventory system, where the company keeps continuous track of their inventory levels and costs.

Question 17

The account Sales Returns and Allowances is debited when items are returned from a customer.

Accepted Answer

The account Sales Returns and Allowances is a contra-revenue account and is debited when goods are returned by customers.

Question 18

Journalize the following transactions using the perpetual inventory method.
Nov. 1 Purchased $3,600 of merchandise from Hilltop, terms 2/10, n/30.
Nov. 5 Purchased $1,750 of merchandise for cash from Owen's Supply.
Nov. 7 Purchased $3,400 of merchandise from Seaside, terms 1/15, n/30.
Nov. 10 Returned $500 of merchandise to Seaside. Credit Memo #131.
Nov. 11 Paid the invoice from Hilltop.

Accepted Answer

The answer of Journalize the following transactions using the perpetual...

Question 19

Journalize the following transactions using the periodic system:
Aug. 6 Purchased $1,030 of inventory on account from Johnston with terms of 2/10, n/30.
Aug. 8 Purchased $2,001 of inventory for cash from Pillner Company.
Aug.15 Paid for August 6 purchase from Johnston.
Aug. 17 Purchased $1,700 of merchandise on account from Luis Company with Terms of 3/15, n/45.

Accepted Answer

The answer of Journalize the following transactions using the periodic...

Question 20

Calculate period end Cost of Goods Sold with the following information:
Beginning Inventory $35,000
Purchases $49,000
Purchases Discounts $3,000
Purchases Returns $4,500
Transportation-in $2,000
Ending Inventory $42,000

Accepted Answer

The answer of Calculate period end Cost of Goods Sold...

Quiz 5: Accounting for a Merchandising Business

A customer purchased items on account from ABC Company. After a few days, the customer returned the goods. ABC will issue a:

A debit memorandum acknowledges the receipt of returned goods from a customer.

The amount of an invoice is $1,000, with terms 2/10, n30. What is the amount to be paid within the discount period?

ABC Corporation pays an invoice for $350 in time to take a 3% discount. The journal entry to record the payment of this invoice under a periodic system is:

Prepare the period-end adjusting entries for a periodic inventory system: Beginning Inventory $55,000 Purchases $69,000 Purchases Discounts $4,000 Purchases Returns $6,500 Transportation-in 32,000 Ending Inventory $52,000

ABC Company returned $750 of goods it had purchased from another company. The original invoice was for $4,200, 3/10, n/30. What is the discount if ABC pays the balance within the discount period?

If an invoice reads n/15, what does this mean?

A journal entry that involves more than two accounts is called a compound journal entry.

Under a periodic inventory system, when goods are returned by a customer the inventory account is not adjusted.

Sales Discounts and Sales Returns and Allowances are contra-accounts of the Sales account.

ABC Corporation has received an invoice for $4,500 with terms of 3/15, n/50. If ABC pays the invoice on the seventeenth day, the Cash account will be credited for what value?

An invoice of $237.50 is dated April 2, terms 2/10, n/30. If the invoice is paid on April 9, what is the amount to be paid?

Debit card and credit card sales are counted as cash transactions.

Cost of Goods Sold is the account that is matched with the Sales account to record the company's cost of the inventory that was sold under a perpetual inventory system.

The account Sales Returns and Allowances is debited when items are returned from a customer.

Calculate period end Cost of Goods Sold with the following information: Beginning Inventory $35,000 Purchases $49,000 Purchases Discounts $3,000 Purchases Returns $4,500 Transportation-in $2,000 Ending Inventory $42,000