Question

1) Assuming a periodic inventory system is used, the entry to record a purchase of merchandise on credit includes:

Multiple Choice: a debit to Purchases and a credit to Accounts Receivable, a debit to Purchases and a credit to Accounts Payable, a debit to Accounts Payable and a credit to Purchases, a credit to Purchases and a credit to Accounts Payable.

2) Credit terms of 2/10, n/45 mean:

Multiple Choice: payment in full is due 2 days after date of the invoice, if the invoice is paid within 10 days of its date, a 2% discount may be taken; otherwise the total amount is due in 35 days, if the invoice is paid within 10 days of its date, a 2% discount may be taken; otherwise the total amount is due in 45 days, payment in full is due 45 days after date of the invoice with no discount offered.

3) Assuming a periodic inventory system is used, the entry to record a return of merchandise purchased on credit would:

Multiple Choice : debit Purchases Returns and Allowances and credit Accounts Receivable, debit Purchases Returns and Allowances and credit Purchases, debit Purchases and credit Purchases Returns and Allowances, debit Accounts Payable and credit Purchases Returns and Allowances.

4) A firm had purchases of $18,400, freight charges of $600, and purchases returns and allowances of $850 during one month. Its net delivered cost of purchases was:

Multiple Choice: $18,650;  $18,150 ; $19,850 ; $16,950.

5) During the year, a firm purchased $256,900 of merchandise and paid freight charges of $36,870. If the total purchases returns and allowances were $13,690 and purchase discounts were $9,160 for the year, what is the net delivered cost of purchases?

Multiple Choice: $197,180 ; $298,300 ;$270,920 ; $289,240

6) On April 5, Fair Coffee, Inc. purchased merchandise with a list price of $1,000 and credit terms 2/10, n/30. On April 6, Fair Coffee returns $200 of the merchandise. Assuming Fair Coffee uses a perpetual inventory system, the journal entry on April 6, to record the return, would be:
A)Accounts Payable 200   Cash   200      B)Accounts Payable 200   Purchase Returns and Allowances   200      C)Purchase Returns and Allowances 200   Accounts Payable   200      D)Accounts Payable 200   Merchandise Inventory   200

Multiple Choice: Option A, Option B, Option C, Option D.

7) On Sept. 1, Jerry’s Lighting purchased merchandise with a list price of $7,600 with credit terms of 1/10, n/30. On Sept. 3, Jerry’s returns $900 of the merchandise. If payment is made within the discount period, the total amount paid by Jerry’s Lighting is:

Multiple Choice: $7,600 ; $7,524 ; $6,633 ; $6,700.

Answer 1