International Business Chapter 9 2 Received payment, within the discount period, for merchandise sold previously

9.3 Learning Objective 9-3

1) The return of merchandise by a credit customer was recorded with a debit to Accounts Payable and a

credit to Accounts Receivable and the subsidiary ledger. This error will cause:

A) the net income for the period to be overstated.

B) the net income for the period to be understated.

C) the control account to not agree with the subsidiary ledger.

D) the assets to be overstated.

2) Collected a payment from a credit customer. This will be recorded with:

A) a credit to an asset account.

B) a credit to a liability account.

C) a credit to Capital.

D) None of these are correct.

3) Sold merchandise subject to a sales tax, accepting cash. This will be recorded with:

A) a credit to an asset account.

B) a credit to a liability account.

C) a debit to Capital.

D) None of these are correct.

4) Sold Merchandise for Cash subject to a sales tax accepting cash. This will be recorded with:

A) a credit to an asset account.

B) a debit to a liability account.

C) a debit to Capital.

D) None of these are correct.

5) Received payment, within the discount period, for merchandise sold previously. This will be recorded

with:

A) a credit to an asset account.

B) a debit to a liability account.

C) a debit to Capital.

D) None of these are correct.

6) Sue’s Jewelry sold 30 necklaces for $25 each to a credit customer. The invoice included a 6% sales tax

and payment terms of 2/10, n/30. In addition, 5 necklaces were returned prior to payment. The entry to

record the payment would include:

A) a credit to Cash for $625.00.

B) a credit to Cash for $662.50.

C) a credit to Accounts Receivable for $625.00.

D) a credit to Accounts Receivable for $662.50.

7) Determine the amount to be paid within the discount period for a previous sale with an invoice price

of $10,000, subject to credit terms of 1/10, n/30.

$ ________

8) Determine the amount of cash collected on a credit sale with a price of $80,000 and credit terms of 1/10,

n/30, assuming the payment was after the discount period had expired.

$ ________

9) Determine the amount of cash collected at the time of making a sale of $7,500 worth of merchandise

subject to a 6% sales tax.

$ ________

10) Determine the amount of cash collected at the time of making a sale of $1,000 worth of merchandise

subject to a 6% sales tax.

$ ________

11) Determine the amount of cash collected on a credit sale in the amount of $4,500, subject to a 6% sales

tax when $500 worth of merchandise has already been returned for credit.

$ ________

12) Explain how the record keeping differs between a cash sale and a credit sale.

9.4 Learning Objective 9-4

1) A record showing the activity and the balances owed by each customer is called the:

A) general ledger.

B) sales journal.

C) cash receipts journal.

D) accounts receivable subsidiary ledger.

2) Accounts of a single type are kept in this ledger:

A) supplemental ledger.

B) additional ledger.

C) subsidiary ledger.

D) None of these answers are correct.

3) When using a subsidiary ledger, the Accounts Receivable account in the general ledger is called the:

A) master account.

B) subsidiary account.

C) receivable account.

D) controlling account.

4) Recording to the accounts receivable subsidiary ledger is done:

A) daily.

B) monthly.

C) quarterly.

D) annually.

5) Every controlling account must have its own:

A) revenue ledger.

B) general ledger.

C) subsidiary ledger.

D) general journal.

6) The principal ledger containing all the balance sheet and income statement accounts is the:

A) general ledger.

B) creditors’ ledger.

C) customers’ ledger.

D) subsidiary ledger.

7) Entries to customers’ accounts for sales are posted in the:

A) accounts receivable subsidiary ledger.

B) accounts payable subsidiary ledger.

C) fixed asset subsidiary ledger.

D) cash subsidiary ledger.

8) A characteristic of a schedule of accounts receivable is that:

A) it contains a list of customers’ names with balances.

B) the total is equal to the accounts receivable control account at the end of the month.

C) it is prepared at the end of the month.

D) All of these answers are correct.

9) Which of the following statements about subsidiary ledgers is most accurate?

A) The subsidiary ledger accounts will never equal the control account in the general ledger.

B) The accounts receivable subsidiary ledger is a book of accounts that provides supporting detail for

Accounts Receivable.

C) The subsidiary ledger accounts will equal the amount in the Sales account.

D) All of these answers are correct.

10) Payment for merchandise sold on credit for $100 subject to 1/10 n/30 was received within the discount

period—$99 was received. This was recorded with a debit to Sales Discounts for $1, a debit to Cash for

$99, and a credit to Accounts Receivable $100, but no mention was made of the subsidiary ledger account.

This error will cause:

A) the net income for the period to be overstated.

B) the net income for the period to be understated.

C) the control account to not agree with the subsidiary ledger.

D) the assets to be overstated.

11) The collection on account within the 1/10 n/30 discount period was recorded using a 10% discount

rather than a 1% discount in both the controlling and subsidiary accounts. This error will cause:

A) the net income for the period to be understated.

B) the net income for the period to be overstated.

C) the control account to not agree with the subsidiary ledger.

D) the assets to be overstated.

12) A checkmark in the PR column in the general journal means:

A) the entry was recorded correctly.

B) the amount was posted to the controlling account.

C) the amount was recorded in the subsidiary ledger.

D) the entry was audited.

13) The accounts receivable subsidiary ledger:

A) is organized in alphabetical order.

B) is not kept in the same book as Accounts Receivable.

C) should equal the controlling account in the general ledger.

D) All of the above are correct.

14) The normal balance of the accounts receivable subsidiary ledger is:

A) credit.

B) debit.

C) It does not have a normal balance.

D) Not enough information provided.

15) An example of a subsidiary ledger is the accounts receivable ledger.

16) Accounts in the accounts receivable subsidiary ledger are listed in order of how much is owed.

17) The balance in the Accounts Receivable account is $2,200 debit. Therefore, the balances in the

subsidiary ledger should be $2,200.

18) The controlling account is found in the subsidiary ledger and it summarizes or controls the general

ledger account.

19) The accounts receivable subsidiary ledger shows the amount owed from each customer.

20) When you record the entry to the subsidiary ledger and place the checkmark in the PR column, it is

not necessary to post to the Accounts Receivable controlling account.

21) The general ledger and the accounts receivable subsidiary ledger are the same book.

22) To show that you have posted to an account in the General Ledger, you use a checkmark.

23) Individual credit customer accounts are kept in the general ledger.

24) Define and compare the accounts receivable subsidiary ledger with the controlling account, Accounts

Receivable.

25) Prepare the necessary general journal entry for July 16, Sold merchandise on account with an invoice

price of $4,500 to Carter and Co.

__________________________________________ __________ __________

26) Prepare the necessary general journal entry for July 16, Sold merchandise on account with an invoice

price of $5,000 to the Taylor Co.

__________________________________________ __________ __________

27) Prepare the necessary general journal entry for July 20.

__________________________________________ __________ __________

28) Prepare the necessary general journal entry for July 25.

__________________________________________ __________ __________

29) Prepare the necessary general journal entry for July 28.

__________________________________________ __________ __________

30) Prepare the necessary general journal entry for April 13.

__________________________________________ __________ __________

31) Prepare the necessary general journal entry for April 14.

__________________________________________ __________ __________

32) Prepare the necessary general journal entry for April 15.

__________________________________________ __________ __________

33) Prepare the necessary general journal entry for April 16.

__________________________________________ __________ __________

34) Prepare the necessary general journal entry for April 20.

__________________________________________ __________ __________

35) Prepare the necessary general journal entry for April 25.

__________________________________________ __________ __________

36) Prepare the necessary general journal entry for April 30.

__________________________________________ __________ __________

37) Prepare the necessary general journal entry for December 2.

__________________________________________ __________ __________

38) Prepare the necessary general journal entry for December 4.

__________________________________________ __________ __________

39) Prepare the necessary general journal entry for December 10.

__________________________________________ __________ __________

40) Prepare the necessary general journal entry for December 16.

__________________________________________ __________ __________

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9.5 Learning Objective 9-5

1) The following are transactions for Brian for the month of October. Indicate how the following

transactions would be recorded by completing the necessary journal entries as appropriate (omit

explanations).

Oct. 1 Brian invested $15,000 in his business.

Oct. 3 Sold $2,500 of merchandise on account to H. Holand, sales invoice No. 1, terms 1/10, n/30.

Oct. 5 Sold $1,200 of merchandise on account to T. Traer, sales invoice No. 2, terms 1/10, n/30.

Oct. 13 Received cash from H. Holand in payment for October 3 transaction, less the discount.

Oct. 14 Issued credit memorandum No. 1 to T. Traer for $100 for merchandise returned from October 5

sale on account.

Oct. 15 Received cash from T. Traer for the amount due, less the discount.

GENERAL JOURNAL

Date

Account Titles and Description

PR

Debit

Credit

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