Solution Manual For College Accounting A Contemporary Approach 5th Edition M David Haddock John Price Michael Farina 3

Solution Manual for College Accounting A
Contemporary Approach, 5th Edition, M. David

Haddock, John Price Michael Farina
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orary-approach-5th-edition-m-david-haddock-john-price-michael-farina-3/
Solution Manual for College Accounting A Contemporary Approach, 5th Edition, M. David Haddoc
Chapter 7: Haddock, College Accounting: A Contemporary

Approach, 5e
Questions and Answers to Section Reviews
Chapter 7: Section 1 Review
1. What is the proper classification of the Sales Tax Payable account?
a. Revenue
b. Liability
c. Expense
d. Contra-revenue
Answer: B
Difficulty: 1 Easy
Learning Objective: 07-01
Topic: Recording Sales for Cash and On Account
Blooms: Remember
AACSB: Analytical Thinking
AICPA: BB Industry
AICPA: FN Measurement
2. Types of business operations are:

a. service, merchandising, corporation
b. sole proprietorship, merchandising, manufacturing
c. service, merchandising, manufacturing
d. service, merchandising, manufacturing, corporation
Answer: C
Difficulty: 1 Easy
Blooms: Remember
AICPA: BB Industry
3. What is the name of the account used to record sales of merchandise inventory?
a. Sales returns and allowances
b. Accounts receivable
c. Fees income
d. Sales
Answer: D
Difficulty: 1 Easy
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Blooms: Remember
AICPA: BB Industry
4. Field Hardware Supply makes a sale on account for $100, plus 6 percent sales tax. In
journalizing this transaction, what amount should be debited to Accounts Receivable?
a. $100
b. $94
c. $106
d. $6
Feedback: $100 sale x 6% sales tax rate = $6 sales tax

$100 sale + $6 sales tax = $106 debited to Accounts Receivable
Answer: C
Difficulty: 2 Medium
Blooms: Understand
AICPA: BB Industry
5. Ferrero Bakery made a sale of $80, plus 5 percent sales tax, to a customer using a bank
credit card. The credit card company charges a 2 percent discount fee. What is the
amount of the credit card expense on this sale?
a. $1.68
b. $82.32
c. $1.60
d. $82.40
Feedback: $80 sale x 5% sales tax rate = $4 sales tax

$80 sale + $4 sales tax = $84 charged to credit card
$84 charged to credit card x 2% discount fee = $1.68 credit card expense
Answer: A
Blooms: Understand
AICPA: BB Industry
6. The journal entry to record the return of product by a customer would include a
a. Debit to Sales

b. Debit to Sales Returns and Allowances
c. Credit to Sales Returns and Allowances
d. Credit to Sales
Answer: B
Difficulty: 1 Easy
Blooms: Remember
AICPA: BB Industry
7. The journal entry to record the return of product by a customer would include a
a. Debit to Sales
b. Credit to Sales
c. Credit to Sales Tax Payable
d. Debit to Sales Tax Payable
Answer: D
Difficulty: 1 Easy
Blooms: Remember
AICPA: BB Industry
Chapter 7: Section 2 Review
1. Sedona Company had sales of $100,000, sales returns and allowances of $4,000, and
sales discounts of $500. What are net sales?
a. $103,500
b. $95,500
c. $104,500
d. $96,500
Feedback: $100,000 sales - $4,000 sales returns and allowances - $500 sales discounts = $95,500
net sales
Answer: B
Topic: Cash Discounts on Sales
Blooms: Understand
AICPA: BB Industry

2. A wholesale business offers a trade discount of 35 percent on a list price of $7,200. At

what amount should the wholesale business record the sale?
a. $4,680
b. $7,200
c. $2,520
d. $9,720
Feedback: $7,200 list price x 35% trade discount rate = $2,520 trade discount
$7,200 list price - $2,520 trade discount = $4,680 sale
Answer: A
Topic: Computing Trade Discounts
Blooms: Understand
AICPA: BB Industry
3. A company that buys $5,000 of goods from a wholesaler offering trade discounts of 20
and 10 percent will pay what amount for the goods?
a. $2,200
b. $3,500
c. $3,475
d. $3,600
Feedback: $5,000 sale x 20% first trade discount = $1,000 first trade discount
$5,000 sale - $1,000 first trade discount = $4,000 difference
$4,000 difference x 10% second trade discount = $400 second trade discount
$4,000 difference - $400 second trade discount = $3,600 invoice price
Answer: D
Topic: Computing Trade Discounts
Blooms: Understand
AICPA: BB Industry
4. What is the account classification of the Sales Discounts account?

a. Expense
b. Liability
c. Contra-revenue
d. Asset

Answer: C
Difficulty: 1 Easy
Blooms: Remember
AICPA: BB Industry
5. An account manager would like to know the balance of a certain customer’s account.
That information can be found in the
a. Sales account in the general ledger
b. Accounts receivable ledger
c. Accounts receivable account in the general ledger
d. Sales ledger
Answer: B
Topic: The Accounts Receivable Ledger
Blooms: Understand
AICPA: BB Industry
6. On April 1, Olympic Company made a sale of $500 on account with terms of 2/10, n/30
to Mendocino, Inc. Mendocino, Inc. returned $100 of product as defective on April 3. On
April 9, Mendocino, Inc. paid the amount due, less the cash discount. What was the
amount of payment made?
a. $392
b. $408
c. $592
d. $490
Feedback: $500 sale - $100 sales return = $400 net sales

$400 net sales x 2% sales discount rate = $8 sales discount
$400 net sales - $8 sales discount = $392 amount of payment
Answer: A
Blooms: Understand
AICPA: BB Industry

Solution Manual for College Accounting A Contemporary Approach, 5th Edition, M. David Haddoc
7. A schedule of accounts receivable prepared at the end of the month should

a. Match, in total, the balance of the Accounts Receivable account in the general
ledger
b. Match, in total, the balance of the Sales account in the general ledger
c. Match, in total, the balance of the Sales account in the general ledger less the
balance of the Sales Discounts account in the general ledger
d. Match, in total, the balance of the Accounts Receivable account in the general
ledger less the balance of the Sales Discounts account in the general ledger
Answer: A
Difficulty: 1 Easy
Topic: Schedule of Account Receivable
Blooms: Remember
AICPA: BB Industry
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Solution Manual for College Accounting A

Contemporary Approach, 5th Edition, M. David

To download the complete and accurate content document, go to:

Chapter 7: Haddock, College Accounting: A Contemporary

2. Types of business operations are:

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Visit TestBankBell.com to get complete for all chapters

Feedback: $100 sale x 6% sales tax rate = $6 sales tax

Feedback: $80 sale x 5% sales tax rate = $4 sales tax

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Chapter 7: Section 2 Review

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. A wholesale business offers a trade discount of 35 percent on a list price of $7,200. At

4. What is the account classification of the Sales Discounts account?

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Feedback: $500 sale - $100 sales return = $400 net sales

Copyright © 2021 McGraw-Hill Education. All rights reserved.

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

7. A schedule of accounts receivable prepared at the end of the month should

Copyright © 2021 McGraw-Hill Education. All rights reserved.

No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Visit TestBankBell.com to get complete for all chapters

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