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Exam 7: Accounting for Sales and Accounts Receivable

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Question 21

Multiple Choice

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In a firm that uses special journals, an allowance given for damaged merchandise is recorded in the

A) cash payments journal.
B) cash receipts journal.
C) purchases journal.
D) general journal.

E) B) and C)
F) None of the above

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Question 22

Multiple Choice

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Which of the following statements is correct?

A) The sales journal is used for recording both cash sales and credit sales.
B) Since the sales journal is used for a single purpose, there is no need to enter any descriptions.
C) To provide an adequate audit trail, sales on credit should be recorded in both the sales journal and the general journal.
D) The complete information for each sale of merchandise on credit can be recorded on one line of the cash receipts journal.

E) A) and B)
F) B) and D)

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Question 23

True/False

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A merchandising business sells goods that it produces.

Hugh Snow returned merchandise to Farley Co. The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a:

If a firm does not have a sales returns and allowances journal, the entries for these transactions are made in

A(n) ____________________ business sells goods that it purchases in finished form for resale.

The Sales Returns and Allowances account has a normal ____________________ balance.

The Sales Returns and Allowances account has a normal debit balance.

The abbreviation S1 in the Posting Reference column of an account shows that the data was posted from page 1 of the sales journal.

The Sales Returns and Allowances account is presented

The sales journal for Carothers Company is shown below. Describe how the amounts would be posted to the general ledger accounts.

In some states, a firm receives a discount for paying the amount of sales tax due on time.

When a business makes a sale on a bank credit card, the business is responsible for collecting from the customer.

In a firm that uses special journals, the sale of merchandise for cash is recorded in the

On the Income Statement, Sales Returns and Allowances have the effect of

Selected balances from the general ledger of the All Star Video Rentals on July 31, 2013, are listed below. Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended July 31, 2013.

For a retailer, bank credit card sales are like cash sales.

In a firm that uses special journals, the acceptance of a return of merchandise from a credit customer is recorded in the

Kay Sadia sold merchandise for $8,750 subject to a 6% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for

Selected balances from the general ledger of the Valley Video Rentals on May 31, 2013, are listed below. Use the appropriate data to prepare the Revenue section of the firm's income statement for the month ended May 31, 2013.