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Accounting Chapter 7
Terms in this set (29)
Exercise 7.3 Recording credit sales. LO 7-2
JCPenney issues its own credit cards to its customers who have established credit with them. It's customers used these cards to charge $300 worth of sales. JCPenney would record these sales by:
debiting Accounts Receivable $300 and crediting Sales $300.
When a business makes a sale on a bank credit card, the business is ultimately responsible for collecting the amount owed from the customer.
The Sales Returns and Allowances account is classified as
a contra revenue account.
ABC Skiing Essentials uses special journals. If a credit customer returns $8,000 of goods on which $560 of sales tax was charged, select the correct entry to record the return:
sales returns and allowances.....8,000
sales tax payable ............... 560
Accounts receivable .........8560 (A)
The Sales account is classified as a(n)
To indicate that the column totals of the sales journal have been posted, a check mark is entered under the column total.
Identify the statement below that correctly describes the Sales Returns and Allowances account.
It normally has a debit balance.
Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a credit to Sales for
The Sales Returns and Allowances account has a normal debit balance.
On Deck Sports Memorabilia store sells a Babe Ruth rookie card for $4,600 on account. If the sales tax on the sale is 8%, what is the amount debited to Accounts Receivable.
$4,600 + $368 ($4,600 × 0.08) = $4,968
In May, a retailer recorded credit sales of $10,000. Assuming the sales tax rate is 7 percent, the entry to record the sales in the sales journal would include:
a debit to Accounts Receivable of $10,700.
Merchandise is sold on credit for $600 plus 5 percent sales tax. The entry in the sales journal will include a debit to Accounts Receivable for
The individual amounts in the Accounts Receivable Debit column of a sales journal should be posted to the accounts receivable subsidiary ledger, and the column total should be posted to the Accounts Receivable account in the general ledger.
To find the balance due from an individual customer, the accountant would refer to
the accounts receivable subsidiary ledger.
Hour Place Clock Shop sold a grandfather clock for $2,250 subject to a 9% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for
In a firm that uses special journals, the sale of merchandise for cash is recorded in the
cash receipts journal.
An example of a merchandising company is a
Hugh Snow returned merchandise to Farley Co. The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a:
Debit Sales Returns and Allowances
After all postings have been made, the totals of the balances in the accounts receivable subsidiary ledger should equal the balance of the Accounts Receivable account in the general ledger.
Kay Sadia sold merchandise for $8,750 subject to a 6% sales tax. The entry in the sales journal will include a debit to Accounts Receivable for
In a firm that uses special journals, the acceptance of a return of merchandise from a credit customer is recorded in the
If a firm had sales of $50,000 during a period and sales returns and allowances of $4,000, its net sales were
$46,000. Explanation$50,000 - $4,000 = $46,000
After all postings have been made, the total of the schedule of accounts receivable should equal
the balance of the Accounts Receivable account in the general ledger.
In a sales journal used to record taxable sales, the total of the Accounts Receivable column should equal
the sum of the totals of the Sales Tax Payable column and the Sales column.
The amount of the trade discount taken by the customer is recorded as a(n)
sales recorded net of trade discounts.
A wholesale firm made sales with the following list prices and trade discounts. Calculate the amount the firm will use to record each sale in the sales journal.
A. $2,400 − $1,200 = $1,200
B. $4,000 − $1,000 = $3,000
$3,000 − $600 = $2,400
ne of the customer accounts from the accounts receivable ledger for Toulouse Company is shown below.
Date Explanation Debit Credit Balance
June 1 Balance 160
3 Sales Slip 1307 2,600 2,760
15 CM 202 160 2,600
20 1,800 800
June 3 - Sold merchandise in the amount of $2,600 on credit using sales slip 1307.
June 15 - Sales return or allowance in the amount of $160 issued using CM 202.
June 20 - Collected $1,800 cash on account.
Accounting Chapter 7