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Accounting Exam Questions Answered Step
By Step
Identify the statements below which summarize what cash discounts are. (Check all that apply.) - ANSWER Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
A buyer views a cash discount as a purchase discount.
Cash discounts are described in the credit terms.
A reduced payment applies to the discount period.
Demonstrate how to prepare a multiple-step income statement by ranking the items below in the order they would appear on a multiple-step income statement of a merchandiser. - ANSWER Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Other revenues and expenses
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 16, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. - ANSWER Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20.
Sally Beauty Warehouse uses the perpetual inventory system to account for its
merchandise. On Nov 2, it sold $700 of merchandise on credit with terms of 2/15,n/30. Demonstrate the required journal entry to record the receipt of payment from the customer on Nov 13, by selecting all of the correct actions below. (Check all that apply.) - ANSWER Debit Cash 686;Debit Sales Discounts 14;Credit Accounts Receivable 700
(sales discounts is a contra revenue account so it should be increased with a debit)
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise on credit. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions below. (Check all that apply.) - ANSWER Debit Cost of Goods Sold $500.
Debit Accounts Receivable $1,400.
Credit Sales $1,400.
Credit Merchandise Inventory $500.
On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 30, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system. - ANSWER Debit Accounts Payable $1,000; credit Cash $1,000.
Under the periodic inventory system, a sale on account will result in the following journal entry: - ANSWER debit to Accounts Receivable and a credit to Sales
On Jan 5, a customer returned merchandise that had been purchased earlier on credit. The original sale was for $500, and the cost to the seller was $150. Demonstrate the required journal entry to record the return on the books of the seller, assuming the goods can be sold to another customer. - ANSWER Debit Sales Returns and Allowances $500; debit Merchandise Inventory $150; credit
Net sales
$10,
Cost of goods sold
$3,200 - ANSWER $10,000 - $3,200= $6,800. $6,800/$10,000= 68%.
Under a periodic inventory system when a sale is made: - ANSWER the revenue but not the cost of goods sold is recorded
Identify the statements below which summarize what cash discounts are. (Check all that apply.) - ANSWER A reduced payment applies to the discount period.
A buyer views a cash discount as a purchase discount.
Sellers can grant a cash discount to encourage buyers to pay earlier.
A seller views a cash discount as a sales discount.
Cash discounts are described in the credit terms.
Juice Drinks received a $50 freight bill for merchandise it purchased with freight terms of FOB shipping point. Assuming it paid the bill immediately, demonstrate the journal entry required to record the freight charges, assuming the periodic inventory system is used.
Multiple choice question. - ANSWER Debit Transportation-In $50 and credit Cash $50.
X-Mart uses the perpetual inventory system to account for its merchandise. On June 1, it sold $7,000 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions below. (Check all that apply.) - ANSWER Credit Merchandise Inventory $500.
Credit Sales $7,000.
Debit Cash $7,000.
Debit Cost of Goods Sold $500.
On June 5, Jo's Market sold $1,000 of goods on credit with terms of 2/10,n/30. How will Jo's Market record the customer's payment on June 8? - ANSWER Debit Cash $980; debit Sales Discounts $20; and credit Accounts Receivable $1,
A journal entry for a sale of merchandise on account will result in all of the following: (Check all that apply). - ANSWER Credit to Sales
Debit to Cost of Goods Sold
Credit to Merchandise Inventory
Debit to Accounts Receivable
LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on December 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (Check all that apply.) - ANSWER Credit Cash $1,000.
Debit Accounts Payable $1,000.
X-Mart purchased $300 of merchandise on credit. Demonstrate the journal entry to record this transaction, assuming the perpetual inventory system is used - ANSWER Debit Merchandise Inventory $300; credit Accounts Payable $300.
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise for cash. The original cost of the merchandise to X-Mart was $500. Demonstrate the required journal entry to record the sale and the cost of the sale by selecting all of the correct actions
