978-0134486833 Test Bank Appendix B Part 3

21) A company has four vendors and the accounts payable subsidiary ledger shows the following

balances.

Alpha

$278,821

Beta

157,474

Gamma

83,943

Delta

44,187

Calculate the accounts payable balance in the general ledger.

A) $436,295

B) $564,425

C) $278,821

D) $285,604

22) State the purpose of a subsidiary ledger. What is included in the accounts receivable subsidiary

ledger?

23) Sales on account are recorded in a cash receipts journal.

24) Entries in the sales journal are posted to both the accounts receivable subsidiary ledger and the

general ledger.

25) After posting entries in a sales journal to the general ledger, the Accounts Receivable balance in the

general ledger should equal the sum of the individual customer balances in the accounts receivable

subsidiary ledger.

26) The sales journal is used for all sales of merchandise inventory.

27) A sales journal is ________.

A) a special journal used to record all the cash sales

B) used to record the sales of assets other than merchandise inventory

C) a special journal used to record credit sales

D) a general journal used to record the adjustments in revenue account

28) Northern Corporation sold goods to Eastern Enterprises for $1,000 on account. Cost of goods sold was

$745. Northern uses a perpetual inventory system and special journals. The cost of goods sold is recorded

in the ________ column of the sales journal.

A) Accounts Receivable DR, Sales Revenue CR

B) Cost of Goods Sold CR, Merchandise Inventory DR

C) Cost of Goods Sold DR, Merchandise Inventory CR

D) Sales Revenue DR, Accounts Receivable CR

29) Southeastern Corporation sold merchandise for $4,450 to Northern, Inc. on account. The cost of goods

sold was $1,185. Southeastern Corporation uses a perpetual inventory system and special journals. The

$4,450 is recorded as ________.

A) an entry in the general journal

B) Accounts Receivable DR, Sales Revenue CR column of the sales journal

C) Merchandise Inventory DR column of the purchases journal

D) Accounts Receivable CR column of cash receipts journal

30) Triangle Corporation sold a product on credit for $2,235 to Hexagon Sales. The cost of goods sold was

$1,324. Assuming Triangle is following a perpetual inventory system and using a sales journal, it will

record $2,235 in the ________.

A) Accounts Receivable CR, Sales Revenue DR column

B) Cost of Goods Sold DR, Merchandise Inventory CR column

C) Merchandise Inventory DR, Cost of Goods Sold CR column

D) Accounts Receivable DR, Sales Revenue CR column

31) California Corporation sold a product for $7,150 to Alliance Enterprises on credit. The cost of goods

sold is $5,650. Assuming the firm is following a perpetual inventory system and using a sales journal, it

will record $5,650 in the ________.

A) Accounts Receivable DR, Sales Revenue CR column

B) Cost of Goods Sold DR, Merchandise Inventory CR column

C) Merchandise Inventory DR, Cost of Goods Sold CR column

D) Sales Revenue DR, Accounts Receivable CR column

32) Which of the following is true of a sales journal prepared under the perpetual inventory system?

A) It includes a Cost of Goods Sold DR, Merchandise Inventory CR column.

B) It records both cash and credit sales transactions.

C) All transactions recorded in a sales journal also are entered in the general journal.

D) It cannot be used with a perpetual inventory system.

33) If a business uses the periodic inventory system, the sales journal will ________.

A) record both the cash and credit sales

B) include a Purchase DR and Account Receivable CR column

C) exclude the Accounts Receivable DR and Sales Revenue CR column

D) exclude the Cost of Goods Sold DR and Merchandise Inventory CR column

34) Which of the following is true of posting from a sales journal to the general ledger?

A) Entries in the sales journal are posted to either the accounts receivable subsidiary ledger or the general

ledger.

B) Individual accounts receivable are posted daily from the sales journal to the accounts receivable

subsidiary ledger.

C) Even though the sales journal is posted monthly to the subsidiary ledger, it is a reliable record of the

amount received from each customer.

D) Under a perpetual inventory system, the sales journal will not have the Cost of Goods Sold DR and

Merchandise Inventory CR column.

35) Ocean Corporation sells a product for $500 on account to Great Atlantic Sales. This transaction will be

recorded in the ________.

A) cash payments journal

B) sales journal

C) cash receipts journal

D) purchase journal

36) Gold Corporation had the following transactions:

Jun. 4

Sold merchandise inventory on account to Sarah Pardee, $1,210. Cost of goods, $920.

Invoice no. 101.

10

Sold merchandise inventory on account to Sean Lewis, $2,100. Cost of goods, $1,660.

Invoice no. 102.

12

Sold merchandise inventory on account to Ellie Robins, $400. Cost of goods, $230.

Invoice no. 103.

26

Sold merchandise inventory on account to Diana Rees, $870. Cost of goods, $630.

Invoice no. 104.

Use the following sales journal to record the preceding transactions. The company uses the perpetual

inventory system.

Sales Journal

Page 1

Date

Invoice

No.

Customer

Account

Debited

Post

Ref.

Accounts Receivable DR

Sales Revenue CR

Cost of Goods Sold DR

Merchandise Inventory

CR

Sarah Pardee

Sean Lewis

Ellie Robins

Diana Rees

37) The cash receipts journal is a special journal used to record business transactions involving cash

receipts and credit sales.

38) In the cash receipts journal, the Other Accounts CR column is used when a transaction involves a

credit entry that is not listed in the headings (columns) of the cash receipts journal.

39) Unlike the sales journal, entries in the cash receipts journal are posted monthly to the accounts

receivable subsidiary ledger and daily to the general ledger.

40) Midwest Enterprises uses special journals. The company borrowed $10,000 from First State Bank.

This transaction is recorded in the ________.

A) general journal

B) debt journal

C) cash receipts journal

D) cash payments journal

41) The sale of merchandise inventory for cash is recorded in the ________.

A) general journal

B) cash receipts journal

C) sales journal

D) accounts receivable journal

42) In a cash receipts journal, ________.

A) cash sales are recorded in the Accounts Receivable CR column and the Cash DR column

B) collections on account are recorded in the Accounts Receivable DR column and the Cash DR column

C) the miscellaneous cash receipt transactions are ignored

D) the cash sales are recorded in the Sales Revenue CR column

43) In a perpetual inventory system, when cash sales are recorded, ________.

A) merchandise inventory decreases and cost of goods sold decreases

B) sales revenue increases and cash decreases

C) sales revenue increases and cost of goods sold decreases

D) merchandise inventory decreases and cost of goods sold increases

44) Which of the following is not typically shown as a separate column in a cash receipts journal that uses

the perpetual inventory system?

A) Interest Revenue CR column

B) Cost of Goods Sold DR, Merchandise Inventory CR column

C) Sales Revenue CR column

D) Sales Discounts Forfeited CR column

45) Which of the following will be recorded in the Other Accounts CR column of the cash receipts

journal?

A) cash sales

B) receipt of interest revenue

C) receipt of accounts receivable

D) sales discounts forfeited

46) A CR.5 posting reference in a subsidiary ledger signifies that the ________.

A) posting is transferred from the cash receipts journal, page 5

B) transaction on page number 5 is credited

C) amount credited is after a 5% discount

D) sales on credit is expected to be paid within five days

47) Every transaction recorded in the cash receipts journal includes a ________.

A) credit to Cash

B) debit to Accounts Receivable

C) credit to Accounts Receivable

D) debit to Cash

48) Australia Corporation sells a product for $500 cash to Martin and Lewis Enterprises. This transaction

will be recorded in the ________.

A) cash payments journal

B) sales journal

C) cash receipts journal

D) purchase journal