Use the following to answer questions 18-19: On November 10 of the current year, Cherokee Industries sold materials to a customer for $8,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for cash discounts. 18. What entry would Cherokee make on November 10? a. Accounts receivable b. Accounts receivable c. Accounts receivable Cash discounts Sales d. Accounts receivable Cash discounts 7,840 19. What entry would Cherokee make on November 17, assuraing the comect payment was received on that date? a. Cash 7,840 Accounts receivable 7,840 b, Cash 7,840 Sales discounts Accounts receivable 7,840 Accounts receivable d. Cash Sales discounts 160 Accounts receivable 8,000 Sales 160 20. Memorex Disks sells computer disk drives with right-of-return privileges. Returns are material and reasonably predictable. Memorex shoula: a. Not record sales until the right to return has expired. b. Record an allowance for sales returns in the year of the sale. c. Debit sales returns in the period of the return. d. Debit sales in the period of the return. 21. A company uses the allowance method to account for bad debts. What is effect on each of the following accounts of the collection of an account previously written off? Allowance for Accounts Uncollectible Accounts Receivable No effect Increase No effect No effect No effect 22. Collection of accounts receivable that previously have been written off results in an increase in cash and an increase in: a. Accounts receivable. b. Allowance for uncollectible accounts. c. Bad debts expense. d. Retained earnings


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *