21) Secret Trails received payment in full within the credit period for horse boarding for $900 plus 6% sales tax. Terms of the sale were 2/10, n/30. Which entry is required to record this payment?

A) Debit Cash, $900; credit Accounts Receivable Sales, $900

B) Debit Cash, $936; debit Sales Discount $18; credit Accounts Receivable, $954

C) Debit Cash, $954; credit Sales, $954

D) Debit Cash, $936; credit Sales, $936

 

22) Urban Camping sold goods for $200 to a charge customer. The customer returned for credit $90 worth of goods. Which entry is required to record the return transaction?

A) Debit Sales Returns and Allowances $90; credit Accounts Receivable for $90

B) Debit Sales Returns and Allowances for $90; credit Sales for $90

C) Debit Sales $90; credit Sales Returns and Allowances $90

D) Debit Accounts Receivable $90; credit Sales Returns and Allowances for $90

 

23) Monica’s Closet received payment in full for goods sold within the discount period on a $500 sales invoice, terms 2/10, n/30. Which entry records this payment?

A) Debit Accounts Receivable; credit Sales for $500

B) Debit Cash; credit Accounts Receivable for $500

C) Debit Cash for $490, debit Sales Discount for $10; and credit Sales for $500

D) Debit Cash for $490, debit Sales Discount for $10; and credit Accounts Receivable for $500

 

24) Medeco sold goods for $100 to a charge customer. The customer returned for credit $25 worth of goods. Terms of the sale were 1/10, n/30. If the customer pays the amount owed within the discount period, what is the amount the customer should pay?

A) $74.25

B) $75.00

C) $100.00

D) $90.00

25) 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

 

26) The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

A) credit terms.

B) net cash.

C) cash on demand.

D) gross cash.

 

27) The contra-revenue accounts include:

A) Sales Tax Payable.

B) Sales Returns and Allowances.

C) Sales Discount.

D) Both B and C are correct.

 

28) A sales discount correctly taken by the charge customer was debited to Sales at the time the entry was recorded. This error will cause:

A) the net income for the period to be overstated.

B) the net income for the period to be understated.

C) the sales discount account to be understated.

D) the sales account to be overstated.

29) Merchandise sold on credit was returned for credit and recorded with a debit to Sales Returns and Allowances and a credit to Accounts Payable. This error will cause:

A) the net income for the period to be overstated.

B) the net income for the period to be understated.

C) the assets to be overstated.

D) the liabilities to be understated.

 

30) The document indicating to the customer that the seller is reducing the amount owed by the customer is:

A) credit memorandum.

B) sales discount.

C) sales returns and allowances.

D) schedule of accounts receivable.

 

 

 



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