Question

1. ( TRUE OR FALSE) On May 1, Petrano Company made a sale on account to Brown Company for $2,000, terms 1/10, n/30. Brown paid the amount due, less the discount, on May 9.the journal entry to record the receipt of cash on Petrano Company's books is debit Cash, $1,980, debit Sales Discounts, $20, and credit Accounts Receivable, $2,000.

2.  The journal entry to record the purchase of merchandise on account for $2,750 with freight of $125 prepaid and added to the invoice is:

A. debit Purchases $2,750, debit Freight In $125; credit Accounts Payable $2,875.

B. debit Accounts Receivable $2,875; credit Sales $2,875.

C. debit Accounts Payable $2,875, debit Freight in $125; credit Purchases $2,750.

D. debit Purchases $2,750; credit Accounts Payable $2,750.

3. ( True or false): On May 1, Ronaldo Company sold merchandise to Green Company in the amount of $2,000, plus 8% sales tax.
the journal entry to record the sale on Ronaldo Company's books is debit Accounts Receivable, $2,160, credit Sales, $2,160.

4. On Deck Sports Memorabilia store sells a Babe Ruth rookie card for $4,000 on account. If the sales tax on the sale is 8%, what is the amount debited to Accounts Receivable.

A. $4,320

B. $4,000

C. $3,992

D. $3,680

Answer 1

Solution 1:

Sales = $2000

Sales discount = $2000 *1% = $20

Cash Received = $2000 -20 = $1980

Entry will be:

Journal Entry
Date	Account Title and explanation	Debit	Credit
09-May	Cash Dr	$1,980.00
	Sales Discount Dr	$20.00
	To Accounts Receivable		$2,000.00

:

Hence The entry given in question is True and correct.

Solution 2:

Journal entry
Account Title and explanation	Debit	Credit
Purchases Dr	$2,750.00
Freight In Dr	$125.00
To Accounts Payable		$2,875.00

Hence option "A" is correct.

Solution 3:

Sales = $2000

Sales Tax Payable = 2000*$8% = $160

Entry Will be:

Journal Entry
Date	Account Title and explanation	Debit	Credit
01-May	Account Receivable Dr	$2,160.00
	To Sales Revenue		$2,000.00
	To Sales Tax Payable		$160.00

Hence the entry in question is False.

Solution 4:

Sales = $4000

Sales Tax Payable = $4000 *8% = $320

Amount to be debited to accounts Receivable = Sales + Sales tax payable = 4000 +320 = $4,320

Hence option "A" is correct.