29 Jun Question Question 1
Question
Question 1
A sales invoice included the following information: merchandise price, $5,000; freight, $900; terms 1/10, n/eom, FOB shipping point. Assuming that a credit for merchandise returned of $700 is granted prior to payment and that the invoice is paid within the discount period, what is the amount of cash that should be received by the seller?
Answer
$5,157
$4,300
$4,257
$4,950
Question 2
Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?
Answer
Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000
Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and
Accounts Receivable-Madison, debit $300; Cash, credit $300
Accounts Receivable-Madison, debit $20,500; Sales, credit $20,500
Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000, and
Freight Out, debit $300; Cash, credit $300
Question 3
Cumberland Co. sells $1,200 of inventory to Hancock Co. for cash. Cumberland paid $850 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?
Answer
Cash $1,200 Dr, Merchandise Inventory $850 Cr
Cash $1,200 Dr, Sales $1,200 Cr, Cost of Merchandise Sold $850 Dr, Merchandise Inventory $850 Cr.
Cash $1,200 Dr, Sales $1,200 Cr
Accounts Receivable $1,200 Dr, Sales $1,200 Cr, Cost of Merchandise Sold $850 Dr, Merchandise Inventory $850 Cr.
Question 4
Discounts taken by a buyer because of early payment are recorded on the seller’s accounting records as
Answer
Purchases discount
Sales discount
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