Accounting Chapter 10 The entry to record returned merchandise to Vine Company

5) The entry to record returned merchandise to Vine Company is:

A) debit Merchandise Inventory; credit Accounts Receivable in the general ledger.

B) debit Accounts Payable; credit Supplies.

C) debit Accounts Payable/Vine Company in the accounts payable subsidiary ledger and debit Accounts

Payable in the general ledger; credit Merchandise Inventory.

D) debit Merchandise Inventory; credit Accounts Payable.

6) Jeff purchased $550 of goods and received credit terms of 5/15, n/30. How much did he pay if payment

was made during the discount period? (Round any intermediate calculations to the nearest cent, and your

final answer to the nearest dollar.)

A) $468

B) $578

C) $550

D) $523

7) The entry to record a payment on a $660 account within the 4% discount period would include a:

A) debit to Accounts Payable for $634.

B) debit to Accounts Payable for $660.

C) debit to Purchases for $634.

D) debit to Cash for $660.

8) Returned merchandise under the periodic inventory method. This will be recorded with:

A) a debit to Accounts Payable and a credit to Purchases Returns and Allowances.

B) a debit to Merchandise Inventory and a credit to Cash.

C) a credit to Accounts Payable and a debit to Merchandise Inventory.

D) a debit to Accounts Payable and a credit to Merchandise Inventory.

9) John bought goods for $390 on credit. John returned $30 worth of goods. Terms of the sale were 5/10,

n/30. If John pays the amount owed within the discount period, what is the amount they should pay?

(Round intermediary and final calculations to the nearest whole dollar.)

A) $390

B) $378

C) $342

D) $360

10) Returned merchandise paid for within the discount period for a Cash refund. This will be recorded

with:

A) a credit to a liability.

B) a credit to both an asset and liability.

C) a debit to a liability.

D) a debit to an asset.

11) Jim’s Accessories bought 150 necklaces for $40 each on account. Payment terms are 5/10, n/30. In

addition, 14 necklaces were returned prior to payment. The entry to record the return would include:

A) a debit to Accounts Payable for $560.

B) a debit to Accounts Payable for $538.

C) a debit to Merchandise Inventory for $560.

D) a debit to Merchandise Inventory for $538.

12) The accounts payable subsidiary ledger:

A) lists accounts alphabetically.

B) lists accounts for which the company owes money.

C) has a controlling account in the general ledger.

D) All of the above are correct.

13) Jack’s Online Service on April 30 has the following transactions:

Merchandise Inventory purchased $32,000

Merchandise Inventory returned 3,000

If Jack’s pays the invoice in time to receive a 1% discount, what is the amount Jack owes?

A) $28,710

B) $29,000

C) $31,680

D) $32,000

14) Sam’s Online Service on April 30 has the following transactions:

Merchandise Inventory purchased $20,000

Merchandise Inventory returned 5,000

If Sam’s pays the invoice in time to receive a 2% discount, what is the amount Sam owes?

A) $15,000

B) $5,000

C) $20,000

D) $14,700

15) Bob’s Restoration purchased merchandise inventory of $67,000. If Bob returned merchandise

inventory of $12,000 and was able to take a discount of 4%, what is the total amount owed?

A) $64,800

B) $67,000

C) $52,800

D) $12,000

16) B & J Lumber Restoration purchased merchandise inventory of $53,000. If B and J returned

merchandise inventory of $14,000 and was able to take a discount of 3%, what is the total amount owed?

A) $39,000

B) $53,000

C) $35,820

D) $37,830

17) Sam’s Online Service on April 30 has the following transactions:

Merchandise Inventory purchased $24,000

Merchandise Inventory returned 5,000

If Sam’s is offered a 4% discount, but does not pay the invoice in time to receive the discount, how much

does Sam owe?

A) $19,000

B) $5,000

C) $24,000

D) $18,240

18) When using a perpetual inventory method, what account(s) must be updated when a sale is

recognized?

A) Cost of Goods Sold

B) Supplies

C) Merchandise Inventory

D) Both A and C are correct.

19) Merchandise Inventory is what type of account?

A) Asset

B) Liability

C) Expense

D) Cost

20) Returned merchandise for credit on account. The perpetual inventory system is in use. This will be

recorded with:

A) a debit to a liability and a credit to an expense.

B) a debit to an asset and a credit to an expense.

C) a debit to a liability and a credit to an asset.

D) a debit to an expense and a credit to a liability.

21) Returned merchandise paid for within the discount period for cash. The perpetual inventory system is

in use. This return will be recorded with:

A) a debit to a liability and a credit to purchases.

B) a debit to an asset and a credit to an asset.

C) a debit to an expense and a credit to a liability.

D) a debit to an expense and a credit to an asset.

22) The Schedule of Accounts Payable is listed by highest to lowest dollar value.

23) A Schedule of Accounts Payable is a list of customer accounts that owe the company money.

24) The controlling account is found in the subsidiary ledger for all accounts payable.

25) The Accounts Receivable and Accounts Payable are both controlling accounts.

26) The accounts payable subsidiary ledger should equal the control account in the general ledger.

27) Individual amounts are recorded during the month to the accounts payable ledger.

28) The buyer issues a debit memorandum to indicate that a previous purchase amount is being reduced

because goods were returned, or an allowance was requested.

29) If a debit memorandum is issued, the buyer will reduce their accounts receivable.

30) Determine the amount to be paid within the discount period for purchase with an invoice price of

$25,000, subject to credit terms of 2/10, n/30.

$ ________

31) Determine the total cost of a purchase paid for within the discount period with an invoice price of

$7,000 and credit terms of 1/10, n/30 when $1,500 has already been returned for credit. The goods were

purchased with freight terms of F.O.B shipping point and freight of $50.

$ ________

32) Determine the amount to be paid within the discount period for purchase with an invoice price of

$15,000 and credit terms of 2/10, n/30 when $1,500 has already been returned for credit.

$ ________

33) Determine the amount of credit (or cash refund) to be earned on a full return of merchandise

purchased with an invoice price of $5,000 and credit terms of 2/10, n/30 when full payment was made

within the discount period.

$ ________

34) Determine the amount to be paid to the vendor within the discount period for purchase with an

invoice price of $6,000 and credit terms of 2/10, n/30 when $500 has already been returned for credit. The

goods were purchased with freight terms of F.O.B shipping point and freight of $50 was included on the

invoice.

$ ________

35) For each of the following, identify in Column 1 the category to which the account belongs, in Column

2 the normal balance for the account, and in Column 3 the financial statement that the account in which

the account balance is reported.

Column 1 Column 2 Column 3

Merchandise Inventory

Sales

Store Rent Expense

Accounts Payable

36) On June 15, Melo Park purchased merchandise for the race track. The invoice was for $6,000, terms

2/10, n/30. On June 20, Paradise Park returned $300 of merchandise for credit. On June 25, it paid the

amount owed. Fill in the blanks below.

a) The debit to Merchandise Inventory on June 15 is ________.

b) The credit to Accounts Payable on June 15 is ________.

c) The credit to Merchandise Inventory on June 20 is ________.

d) The credit to Cash on June 25 is ________.

e) The credit to Merchandise Inventory on June 25 is ________.

Journalize the following transactions. All purchases are on account and subject to terms of 2/10, n/30. The

perpetual inventory method is used.

Nov. 3 Purchased merchandise with a price of $4,000 from the Bart Inc.

Nov. 5 Purchased merchandise from the Thies and Co. with a price of $2,000.

Nov. 7 Purchased merchandise with a price of $2,000 from the Montana Supply Co.

Nov. 10 Paid the amount due to Bart Inc.

Nov. 12 Paid the amount due to Thies and Co.

Nov. 23 Paid the amount due to Montana Supply Co.

37) Journalize the Nov. 3 transaction.

__________________________________________ __________ __________

38) Journalize the Nov. 5 transaction.

__________________________________________ __________ __________

39) Journalize the Nov. 7 transaction.

__________________________________________ __________ __________

40) Journalize the Nov. 10 transaction.

__________________________________________ __________ __________

41) Journalize the Nov. 12 transaction.

__________________________________________ __________ __________

42) Journalize the Nov. 23 transaction.

__________________________________________ __________ __________

Prepare the general journal entries to record the following transaction. All purchases are on account and

subject to terms of 2/10, n/30. The perpetual inventory method is in use.

May 5 Purchased merchandise from the Jackson Inc. with a price of $17,000.

May 9 Returned $1,500 worth of merchandise to Jackson Inc.

May 14 Paid the amount due to Jackson Inc.

43) Prepare the general journal entry for the May 5 transaction.

__________________________________________ __________ __________

44) Prepare the general journal entry for the May 9 transaction.

__________________________________________ __________ __________

45) Prepare the general journal entry for the May 14 transaction.

__________________________________________ __________ __________

The Bixby Co. had the following transactions involving the purchase of merchandise. Prepare the

necessary general journal entries. Any applicable freight costs are prepaid by the seller. The perpetual

inventory method is in use.

June 16 Purchased merchandise having a price of $6,000 from the Shelby Manufacturing Co.

on account with credit terms 2/10, n/30. Transportation terms F.O.B destination.

June 16 Purchased merchandise having a price of $9,000 from the Ajax Supply House

on account with credit terms 2/10, n/30. Transportation terms F.O.B shipping point.

The freight costs of $175 were added to the invoice. Merchandise was shipped June 16.

June 17 Received the goods from Shelby.

June 17 Received the goods from Ajax.

June 20 Returned for credit merchandise with an invoice price of $800 to Ajax.

June 25 Paid Shelby the amount owed.

June 28 Paid Ajax the amount owed.

June 30 Returned for cash, merchandise with an invoice price of $400 to Shelby.

46) Prepare the necessary general journal entry for June 16, Purchased merchandise having a price of

$6,000 from the Shelby Manufacturing Co. on account with credit terms 2/10, n/30. Transportation terms

F.O.B destination.

__________________________________________ __________ __________

47) Prepare the necessary general journal entry for June 16. Purchased merchandise having a price of

$9,000 from the Ajax Supply House on account with credit terms 2/10, n/30. Transportation terms F.O.B

shipping point. The freight costs were $175.

__________________________________________ __________ __________

48) Prepare the necessary general journal entry for June 17. Received the goods from Shelby.

__________________________________________ __________ __________

49) Prepare the necessary general journal entry for June 17. Received the goods from Ajax.

__________________________________________ __________ __________

50) Prepare the necessary general journal entry for June 20.

__________________________________________ __________ __________

51) Prepare the necessary general journal entry for June 25.

__________________________________________ __________ __________

52) Prepare the necessary general journal entry for June 28.

__________________________________________ __________ __________

53) Prepare the necessary general journal entry for June 30.

__________________________________________ __________ __________

54) Compare and contrast the controlling account Accounts Payable to the accounts payable subsidiary

ledger. Discuss why the balance of the controlling account, Accounts Payable, does not equal the sum of

the accounts payable ledger during the month.