Exam 9: Sales and Purchases

Hi-View Industries, sells merchandise to Action Powersports on account. As terms of the deal, Hi-View Industries will coordinate the shipment, but Action Powersports is responsible for paying the shipping costs. This is an example of:

Match the terms below with the correct definitions. -Journal in which returns and allowances (on account) are recorded

Jones Co. sells merchandise to J. Smith on account. As the seller Jones Co. pays the cost of transportation to delivery the goods and will not be reimbursed from J. Smith. This is an example of:

The _____ is the source for preparing the schedule of accounts receivable.

A contra-revenue account to record returned goods is:

Jimmie Jones purchases merchandise from GPS Industries for $15,500 on account. The terms were FOB Destination with freight costs of $100. Upon inspection of the merchandise received, Jimmie Jones discovers damaged goods in the amount of $2,500 and requests to return the damaged merchandise to GPS Industries. Once the return is processed, what is the new balance owed by Jimmie Jones?

With FOB shipping point, the seller maintains ownership of the goods until the goods are delivered.

The Purchases account is used to record the buying of goods and supplies.

Match the terms below with the correct definitions. -Buyer responsibility for paying the freight cost.

Lasalle Co. sold merchandise on account in the amount of $550. The sales tax rate is 6.5%. What is the amount credited to the Sales Tax Payable account.

An account in the general ledger that summarizes the balances found in the subsidiary ledger(s) is:

The total of the schedule of accounts receivable must equal

The purpose of an accounts receivable ledger is

One of the advantages of a sales journal is that it eliminates individual posting of entries to the Accounts Receivable account in the general ledger.

For a sale of $300, on which 8 percent sales tax is charged, the amount debited to Accounts Receivable is $324.

The invoice that is first prepared by the seller is called a sales invoice; the buyer calls the same invoice a purchase order.

When using a perpetual inventory system, a business will debit Merchandise Inventory and credit Cost of Goods Sold each time a sale is recorded.

Under the perpetual inventory system, the sale of goods is recorded with two entries. One entry debits Cash or Accounts Receivable and credits sales. The second entry

The return of goods for credit would be recorded in the purchases journal.

Customers' individual accounts are included in a subsidiary ledger referred to as the