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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
32
Copyright © 2018 Pearson Education, Inc.
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
35
Copyright © 2018 Pearson Education, Inc.
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
