978-0134486833 Test Bank Appendix B Part 4

49) Bronze Corporation had the following transactions:

Jun. 6

Sold merchandise inventory for cash, $2,200. Cost of goods, $1,400.

9

Collected interest revenue of $2,350.

15

Received cash from Jim Rhodes, $1,100, on account. There was no discount.

27

Received $5,400 from Steve McNeil representing $5,292 he owed plus $108 sales discount

forfeited.

Use the following cash receipts journal to record the preceding transactions. The company uses the

perpetual inventory system.

Cash Receipts Journal Page 3

Date

Accounts

Credited

Post

Ref.

Cash

DR

Accounts

Receivable

CR

Sales

Revenue

CR

Sales

Discounts

Forfeited

CR

Other

Accounts

CR

Cost of Goods

Sold DR

Merchandise

Inventory CR

Interest

Revenue

Jim Rhodes

Steve

McNeil

32

Learning Objective APP. B-3

1) Cash purchases are recorded in the purchases journal.

2) The purchases journal is a special journal used to record all purchases of merchandise inventory, office

supplies, and other assets on account.

3) When using a periodic inventory system, the Merchandise Inventory DR column, in the purchases

journal, is replaced with a column titled Cost of Goods Sold DR.

4) Purchases on account are recorded in the purchases journal.

5) The Other Accounts DR columns of a purchases journal are used for recording merchandise inventory

and office supplies.

Answer: FALSE

Explanation: The Other Accounts DR columns of a purchases journal are used for purchases on account

other than merchandise inventory and office supplies.

Diff: 1

LO: APP. B-3

AACSB: Application of knowledge

AICPA Functional: Measurement

PE Question Type: Concept

H2: The Purchases Journal

6) Entries from the purchases journal are posted monthly to the accounts payable subsidiary ledger and

daily to the general ledger.

7) When using a purchases journal, Accounts Payable is always credited.

8) Which of the following is NOT included in the purchases journal?

A) purchases of merchandise inventory for cash

B) purchase of merchandise inventory on account

C) purchase of office supplies on credit

D) purchase of equipment on account

9) The purchases journal is a special journal that ________.

A) has special columns for credits to merchandise inventory

B) is used to record all purchases of merchandise inventory

C) has a special column for debits to accounts payable

D) is used to record merchandise inventory, office supplies, and other assets purchased on account

10) Which of the following is a column in a purchases journal?

A) Cost of Goods Sold CR

B) Accounts Payable CR

C) Sales Revenue DR

D) Other Accounts CR

11) The purchases journal of a business that uses the periodic inventory system will include a column

titled ________.

A) Cost of Goods Sold DR

B) Purchases DR

C) Accounts Payable DR

D) Merchandise Inventory DR

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12) Which of the following transactions is recorded in the purchases journal?

A) purchase of furniture on account

B) cash purchase of merchandise inventory

C) sale of merchandise inventory on account

D) cash sales of merchandise inventory

13) Which of the following is true of a purchases journal?

A) For a periodic inventory system, the Merchandise Inventory DR column is replaced with a column

titled Cost of Goods Sold DR.

B) Cash purchases are recorded in the purchases journal.

C) For a perpetual inventory system, a column titled Purchases DR is needed.

D) The Other Accounts DR column is used for purchases on account of items other than merchandise

inventory and office supplies.

14) An automobile parts retailer purchases merchandise inventory on account. When using a manual

accounting information system, this transaction is recorded in the ________.

A) purchases journal

B) general journal

C) cash payments journal

D) sales journal

15) On July 10, a hardware retailer purchased merchandise inventory on account for $1300. The company

plans to pay $1000 the following week and the remaining amount the week after. Which of the following

is the correct entry to record the July 10 transaction in a purchases journal? Assume a perpetual inventory

system is used.

A) $1000 will be recorded in the Accounts Payable CR and Merchandise Inventory CR columns.

B) $2300 will be recorded in the Accounts Payable DR and Merchandise Inventory DR columns.

C) $1300 will be recorded in the Merchandise Inventory CR and Accounts Payable DR columns.

D) $1300 will be recorded in the Accounts Payable CR and Merchandise Inventory DR columns.

16) On April 1, a hardware retailer purchases inventory on account for $1500. Which of the following

correctly describes the effect of this transaction? Assume a perpetual inventory system is used.

A) Merchandise Inventory decreases by $1500 and Accounts Receivable decreases by $1500.

B) Merchandise Inventory decreases by $1500 and Accounts Receivable increases by $1500.

C) Merchandise Inventory increases by $1500 and Accounts Payable decreases by $1500.

D) Merchandise Inventory increases by $1500 and Accounts Payable increases by $1500.

17) When posting entries from a purchases journal to the general ledger, ________.

A) posting references are not shown in the subsidiary ledger

B) the Accounts Payable balance in the general ledger will be less than the sum of the individual vendor

balances in the subsidiary ledger

C) the amounts in the Other Accounts DR column are posted individually to the specific accounts

D) entries are posted on a daily basis for all the accounts

18) In a purchases journal, the total of the ________ column is not posted to the general ledger.

A) Merchandise Inventory DR

B) Other Accounts DR, Amount

C) Accounts Payable CR

D) Office Supplies DR

19) Describe the transactions recorded in the purchases journal.

20) Golden Corporation had the following transactions:

Oct 1

Purchased merchandise inventory on account with credit terms of 1/10, n/30 from Rice

Co., $2,100.

10

Purchased office supplies on account from MET Co., $250. Terms were n/EOM.

26

Purchased furniture on account with credit terms of 2/10, n/60 from Ocean Co., $1,700.

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

inventory system.

21) The cash payments journal is a special journal used to record cash payments by currency but not by

check.

22) The cash payments journal has two debit columns – one for Accounts Payable and one for

Merchandise Inventory.

23) After posting from the cash payments journal, the posting reference is printed in the general journal.

24) The cash disbursements journal is also called the check register.

25) Entries in the cash payments journal are posted daily to the accounts payable subsidiary ledger and

monthly to the general ledger.

26) In a manual accounting information system, cash purchases are generally recorded in the ________.

A) sales journal

B) cash receipts journal

C) cash payments journal

D) purchases journal

27) An automobile parts retailer purchases merchandise inventory for cash. When using a manual

accounting information system, this transaction is recorded in the ________.

A) purchases journal

B) general journal

C) cash payments journal

D) sales journal

28) A cash payments journal is a special journal that ________.

A) differs from the cash disbursements journal

B) eliminates the need to perform a bank reconciliation

C) is used to record cash payments by check and currency

D) is used to record the net of cash payments and cash receipts by check and currency