9.2   Learning Objective 9-2

 

1) If a credit memorandum is issued, what account will be increased on the seller’s books?

A) Accounts Receivable

B) Accounts Payable

C) Sales Discount

D) Sales Returns and Allowances

 

2) If a credit memorandum is issued, what account will be decreased on the seller’s books?

A) Accounts Receivable

B) Accounts Payable

C) Sales Discount

D) Sales Returns and Allowances

 

3) Sue’s Jewelry sold 30 necklaces for $25 each to a credit customer. The invoice included a 6% sales tax and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to record the return would include:

A) a debit to Sales Returns and Allowances for $132.50.

B) a debit to Sales Returns and Allowances for $125.00.

C) a credit to Sales Tax Payable for $7.50.

D) a debit to Accounts Receivable for $132.50.

4) Sales Returns and Allowances is a contra-revenue account with a normal credit balance.

 

5) The credit period is longer than the discount period.

 

6) Explain why, when a customer returns merchandise after it was paid for, he/she may or may not receive credit equal to the invoice value of the merchandise returned.

 

9.3   Learning Objective 9-3

 

1) The return of merchandise by a credit customer was recorded with a debit to Accounts Payable and a credit to Accounts Receivable and the subsidiary ledger. 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 control account to not agree with the subsidiary ledger.

D) the assets to be overstated.

 

2) Collected a payment from a credit customer. This will be recorded with:

A) a credit to an asset account.

B) a credit to a liability account.

C) a credit to Capital.

D) None of these are correct.

3) Sold merchandise subject to a sales tax, accepting cash. This will be recorded with:

A) a credit to an asset account.

B) a credit to a liability account.

C) a debit to Capital.

D) None of these are correct.

 

4) Sold Merchandise for Cash subject to a sales tax accepting cash. This will be recorded with:

A) a credit to an asset account.

B) a debit to a liability account.

C) a debit to Capital.

D) None of these are correct.

 

 

 



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