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Chapter 9—Sales and Purchases
MULTIPLE CHOICE
1. From the viewpoint of the buyer, a business form prepared by the seller that lists the items shipped,
their cost, and the shipping terms is a(n)
a. purchase requisition.
b. COD statement.
c. purchase order.
d. sales requisition.
e. invoice.
ANS: E PTS: 1 DIF: Difficulty: Easy
OBJ: LO: 9-1 NAT: AACSB: Reflective Thinking
STA: AICPA-FN: Measurement|ACBSP: Business Forms KEY: Bloom's: Knowledge
2. A one-column sales journal may be used to record

a. sales of supplies on account.
b. sales of goods on account.
c. sales of goods for cash.
d. sales of supplies for cash.
e. collections on account.
ANS: B PTS: 1 DIF: Difficulty: Easy
STA: AICPA-FN: Measurement|ACBSP: Special Journals KEY: Bloom's: Comprehension
3. Assuming the use of special journals, the sale of merchandise to Jerri Wiles on account would be
recorded in the
a. sales journal.
b. accounts receivable journal.
c. purchases journal.
d. cash receipts journal.
e. cash payments journal.
ANS: A PTS: 1 DIF: Difficulty: Easy
4. Which of the following is recorded in the sales journal?

a. return of merchandise purchased for cash
b. sale of merchandise for cash
c. sale of merchandise on account
d. return of merchandise purchased on account
e. purchase of merchandise for cash
ANS: C PTS: 1 DIF: Difficulty: Easy
5. Customers' individual accounts are included in a subsidiary ledger referred to as the

a. accounts payable ledger.
b. controlling ledger.
c. miscellaneous ledger.
d. accounts receivable ledger.
e. general ledger.
ANS: D PTS: 1 DIF: Difficulty: Easy
STA: AICPA-FN: Measurement|ACBSP: Recording Transactions
KEY: Bloom's: Knowledge
6. The entries in the sales journal must also be posted individually to the
a. Accounts Receivable and Sales accounts.
b. Sales account.
c. Accounts Receivable ledger.
d. Accounts Receivable controlling account.
e. accounts payable ledger.
7. The purpose of an accounts receivable ledger is

a. to provide information for customers who call.
b. to provide detailed information to management concerning Accounts Receivable accounts.
c. to provide information to be used in preparing a schedule of accounts receivable.
d. all of these.
e. none of these.
ANS: D PTS: 1 DIF: Difficulty: Moderate
KEY: Bloom's: Comprehension
8. The total of the customer accounts receivable ledger at the end of the accounting period must equal the
total of the
a. creditors' accounts payable ledger.
b. Accounts Payable account in the general ledger.
c. Accounts Receivable account in the general ledger.
d. Accounts Receivable Credit column in the cash receipts journal.
e. Accounts Receivable Debit column in the cash receipts journal.
9. The schedule of accounts receivable shows

a. a list of sales returns for the month.
b. total sales for the month.
c. a list of individual creditors.
d. a list of individual sales.
e. a list of the balances of credit customer accounts.
10. The total of the schedule of accounts receivable must equal
a. the total of the sales on account for the month.
b. the balance of the Accounts Receivable controlling account.
c. the total of all sales for the month.
d. sales on account less cash sales for the month.
e. the balance of the Accounts Payable controlling account.
11. When merchandise previously sold is returned for credit, the journal entry is
a. debit Sales; credit Accounts Receivable.
b. debit Sales Returns and Allowances; credit Accounts Payable.
c. debit Accounts Receivable; credit Sales Returns and Allowances.
d. debit Sales Returns and Allowances; credit Accounts Receivable.
e. debit Accounts Receivable; credit Purchases Discounts.
12. If a customer purchases goods for $560 on account and later is issued a credit memorandum to receive
credit for the return of $160 of goods, the balance due is
a. $160.
b. $400.
c. $560.
d. $720.
e. none of these.
ANS: B PTS: 1 DIF: Difficulty: Moderate
OBJ: LO: 9-4 NAT: AACSB: Analytic
KEY: Bloom's: Application
13. Torber bought goods from Kole Company. The next day, Torber returned the goods because they had
a defect. Kole Company would record this as a(n)
a. sales return.
b. sales discount.
c. purchase discount.
d. purchase return.
e. abnormal sale.
14. Some of the goods that were previously sold to a customer on account were returned to the seller, and
the seller used a form to show the amount and terms of the return. The source document for the journal
entry for this return is called a
a. purchase invoice.
b. debit memorandum.
c. credit memorandum.
d. sales invoice.
e. return invoice.
15. The purchases journal is used for the purchase of

a. merchandise for cash.
b. merchandise on account.
c. assets other than merchandise for cash.
d. assets other than merchandise on account.
e. merchandise or other assets for cash.
16. The account that is credited for every transaction in the purchases journal is
a. Cash.
b. Purchases Discounts.
c. Accounts Receivable.
d. Sales Discounts
e. Accounts Payable.
17. The individual amounts in the Accounts Payable Credit column of the purchases journal are posted
a. individually to the Accounts Payable account in the general ledger.
b. individually to the accounts payable ledger.
c. individually to the Purchases account in the general ledger.
d. in total to the accounts payable ledger.
e. in total to the accounts receivable ledger.
18. Amounts are posted individually from the purchases journal to the
a. Credit column of the creditors' accounts in the accounts payable ledger.
b. Credit column of the Inventory account in the general ledger.
c. Credit column of the Accounts Receivable account in the general ledger.
d. Debit column of the Cash account in the general ledger.
e. Credit column of the Cash account in the general ledger.
ANS: A PTS: 1 DIF: Difficulty: Moderate
19. Entries in the purchases journal are posted to the

a. general ledger only.
b. accounts payable ledger only.
c. accounts payable ledger and the purchases ledger.
d. general ledger and the accounts payable ledger.
e. accounts payable ledger and the accounts receivable ledger.
20. The accounts payable ledger has postings from which of the following sets of journals?
a. Purchases, cash payments, and general
b. Purchases, cash receipts, and general
c. Purchases and sales
d. Cash payments and sales
e. Sales and cash payments
21. The entries in a purchases journal are posted to which of the following subsidiary ledger?
a. Accounts receivable
b. Sales
c. Purchases
d. Inventory
e. Accounts payable
22. A single summarizing account in the general ledger, representing all the accounts in a particular
subsidiary ledger, is referred to as a
a. response account.
b. summary account.
c. special account.
d. pass-through account.
e. controlling account.
23. A major advantage of controlling accounts is that their use makes it possible to reduce the number of
a. entries in subsidiary ledgers.
b. columns in special journals.
c. accounts in the general ledger.
d. all of these.
e. none of these.
24. A controlling account can be found in the

a. general ledger.
b. source documents.
c. accounts receivable ledger.
d. income statement.
e. accounts payable ledger.
25. The source for preparing the schedule of accounts payable is the
a. purchase invoices.
b. purchases journal.
c. Accounts Payable controlling account.
d. accounts payable ledger.
e. accounts receivable ledger.
26. When goods previously purchased on account are returned for credit, the journal entry is
a. debit Accounts Payable; credit Purchases Returns and Allowances.
b. debit Purchases Returns and Allowances; credit Accounts Payable.
c. debit Purchases; credit Purchases Returns and Allowances.
d. debit Accounts Receivable; credit Purchases Returns and Allowances.
e. debit Purchases Returns and Allowances; credit Accounts Receivable.
27. The account used to record transportation costs of goods purchased for resale is
a. Freight Out.
b. Freight In.
c. Freight for Cash.
d. Transportation Out.
e. Transportation Expense.
28. Chandler Company bought goods from Lisel Company, with shipping terms FOB destination. Which
of the following statements correctly identifies who is to pay the freight bill when the title is
transferred?
a. Lisel pays transportation, and title is exchanged when goods are unloaded at Chandler
Company.
b. Chandler pays transportation, and title is exchanged when goods are loaded at Lisel
Company.
c. Lisel pays transportation, and title is exchanged when goods are unloaded at Lisel
Company.
d. The buyer pays the freight, thus the term FOB (free on board).
e. Chandler pays transportation, and title is exchanged when goods are unloaded at Chandler
Company.
29. Freight charges may be

a. listed separately on the invoice.
b. billed separately from the invoice.
c. included in the price of the goods on the invoice.
d. all of these.
e. none of these.
30. A contra-revenue account to record returned goods is:

a. Freight-In
b. Purchases Returns and Allowances
c. Sales Returns and Allowances
d. Sales Discounts
31. Type of account and normal balance of Sales Discount:

a. Asset, DR
b. Revenue, CR
c. Liability, CR
d. Contra-Revenue, DR
STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge
32. An account that is used to record merchandise bought for resale:

a. Purchases Account
b. Purchases Returns & Allowance
c. Sales Discount
d. Supplies
33. Account type and normal balance of the Purchases Account:

a. Asset, DR
b. Asset, CR
c. Expense, DR
d. Expense, CR
STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge
34. Jones Co. takes a physical inventory count of their merchandise each year in order to update the
inventory value. This is an example of a(n):
a. Perpetual Inventory System
b. Periodic Inventory System
c. Re-evaluation Inventory System
d. Adjusting Inventory System
STA: AICPA-FN: Measurement|ACBSP: Inventories Reporting
35. An account used to record transportation charges on incoming merchandise intended for resale:
a. Freight-Out
b. Freight-Received
c. Freight-In
d. Merchandise Freight
36. A liability account used to record sales tax collected and owed:
a. Sales Tax Expense
b. Sales Tax Payable
c. Merchandise Tax
d. Prepaid Taxes
37. A contra-account that records the company’s returns of merchandise purchased from suppliers:
a. Purchases Discounts
b. Sales Returns and Allowances
c. Freight-In
d. Purchases Returns and Allowances
38. Smith Co. keeps a continuous record of their inventories and costs of goods. This is an example of a:
a. Perpetual Inventory System
b. Periodic Inventory System
c. Continuous Inventory System
d. Re-evaluation Inventory System
39. Classic Accessories, Inc. sold merchandise on account to Hi-View Industries for $2,950. What is the
journal entry Classic Accessories will use to record this transaction?
a. Account Receivable, Hi-View DR
Sales CR
b. Cash DR
Sales CR
c. Sales DR
Accounts Receivable, Hi-View CR
d. Sales DR
Cash CR
40. The ledger that provides a separate record of credit customers and their respective balances is:
a. Accounts Ledger
b. Accounts Receivable Ledger
c. Accounts Payable Ledger
d. Customer Ledger
41. A form used by business to inform customers that their account balance has been reduced is:
a. Debit Memorandum
b. Credit Memorandum
c. Adjustment Memorandum
d. Sales Return and Allowance Memo
42. Jones Supply Co. sold merchandise on account to J. Smith, invoice no. 151, for $185.50, plus 6% sales
tax. What is the entry made to Accounts Receivable and Sales Tax Payable respectively?
a. $185.50 DR, $11.13 CR
b. $185.50 CR, $11.13 DR
c. $196.63 DR, $11.13 CR
d. $196.63 CR, $11.13 DR
ANS: C PTS: 1 DIF: Difficulty: Moderate
43. A company’s written offer to buy goods:

a. Offer for Goods
b. Purchase Requisition
c. Purchase Order
d. Purchase Source Document
44. A subsidiary ledger that contains individual accounts of creditors.

a. Purchase Journal
b. Accounts Payable Ledger
c. Creditor Ledger
d. Vendor Ledger
45. 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:
a. FOB Destination
b. FOB Shipping Point
c. Freight-In
d. Freight-Out
46. 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:
a. FOB Destination
b. FOB Shipping Point
c. Freight-In
d. Freight-Out
47. Which of the following is NOT an example of good internal controls over purchases?
a. Purchases made only after proper authorization
b. Purchase Orders Pre-Numbered
c. Carefully checking in goods upon receipt for quantity and damage
d. For maximum control, one person should handle the entire purchase process from ordering
to paying for the goods.
STA: AICPA-FN: Measurement|ACBSP: Internal Control KEY: Bloom's: Comprehension
48. Which is NOT a characteristic of the Sales Returns and Allowance Account?
a. It has a debit balance
b. It tracks returns from vendors
c. It tracks returns from customers
d. It is a contra-revenue account
49. XYZ Motors makes a sale of $15,600 on account. The sales tax rate is 8%. What is the amount
debited to Accounts Receivable?
a. $1,248
b. $15,600
c. $14,352
d. $16,848
50. 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.
a. $550
b. $35.75
c. $585.75
d. $514.35
51. J. Smith purchases merchandise from Hi-View Industries for $25,250 on account. Upon inspection of
the merchandise received, J. Smith discovers damaged goods in the amount of $1,000 and requests to
return the damaged merchandise to Hi-View Industries. What source document would Hi-View
industries use for the journal entry to process this return?
a. Debit Memorandum
b. Credit Memorandum
c. Purchase Memorandum
d. Return Memorandum
52. 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?
a. $13,000
b. $13,100
c. $15,500
d. $15,600
53. What is the correct entry to record sales tax collected:

a. Sales Tax Expense DR
b. Sales Tax Expense CR
c. Sales Tax Payable DR
d. Sales Tax Payable CR
54. A schedule of Accounts Receivable is prepared from:

a. Trial Balance
b. Balance Sheet
c. Accounts Receivable Subsidiary Ledger
d. Accounts Receivable Control Account
STA: AICPA-FN: Measurement|ACBSP: Business Forms KEY: Bloom's: Comprehension
55. When goods are shipped FOB shipping point, which of the following is NOT true?
a. The seller assumes responsibility for all freight costs
b. Shipping costs may be listed separately on the customer’s invoice
c. The seller may pay the freight charges directly, but invoices the buyer.
d. The buyer is responsible for all freight costs
56. Special journals are books of original entry that help simplify the recording process. Which is NOT
an example of a special journal?
a. Sales Journal
b. General Journal
c. Purchase Journal
d. Cash Receipts Journal
e. Cash Payments Journal
OBJ: LO: 9-8 |LO: 9-9 NAT: AACSB: Reflective Thinking
57. An account in the general ledger that summarizes the balances found in the subsidiary ledger(s) is:
a. General Account
b. Controlling Account
c. Ledger Account
d. Journal Account
58. Merchandising companies include

a. Wholesales
b. Retailers
c. Both A & B
d. Neither A or B
59. 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
a. debits Cost of Goods Sold and credits Merchandise Inventory.
b. debits Merchandise Inventory and credits Cost of Goods Sold.
c. debits Cost of Goods Sold and credit Purchases.
d. debits Purchases and credits Merchandise Inventory.
e. debits Income Summary and credits Cost of Goods Sold.
TRUE/FALSE
60. The invoice that is first prepared by the seller is called a sales invoice; the buyer calls the same invoice
a purchase order.
ANS: F PTS: 1 DIF: Difficulty: Easy

OBJ: LO: 9-1 | LO: 9-4 NAT: AACSB: Reflective Thinking
61. Cash sales are recorded in the sales journal.

62. For a sale of $300, on which 8 percent sales tax is charged, the amount debited to Accounts Receivable
is $324.
ANS: T PTS: 1 DIF: Difficulty: Easy

63. When recording sales of goods for cash, debit Accounts Receivable and credit Cash.

64. Under the accrual basis of accounting, sales on account are not recorded in the sales journal until
payment is received.

65. Transactions in the sales journal are posted both to the general ledger and the accounts receivable
ledger.

66. After posting the total goods sold on account to the Accounts Receivable account, the accountant
places a check mark below the Accounts Receivable column in the sales journal.
ANS: F PTS: 1 DIF: Difficulty: Moderate

67. Generally, the Accounts Receivable controlling account will be up to date only at the end of the
month.

68. The total of goods sold on account is normally posted daily from the sales journal to the general
ledger.

69. When a journal entry includes either a debit or a credit to Accounts Receivable, the amount must be
posted to both the general ledger and the subsidiary ledger.
ANS: T PTS: 1 DIF: Difficulty: Moderate

70. 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.

71. Debiting the Sales Returns and Allowances account will have the same effect on sales as a deduction
from the Sales account.

STA: AICPA-FN: Measurement|ACBSP: Special Journals KEY: Bloom's: Knowledge
72. The Sales Returns and Allowances account normally has a debit balance.

73. The seller would record the return of merchandise sold on account in the sales journal.

74. When a customer returns goods for credit, the transaction is recorded in the purchases journal.

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

76. The spaces in the purchases journal used for the invoice date and terms are intended to make it easier
to pay the bill on time.
77. The use of a purchases journal makes any posting to the general ledger unnecessary.

78. The Accounts Payable account in the general ledger controls the accounts payable ledger.

79. A debit to Accounts Payable for a return of goods on account will be posted to the controlling account
but not to the individual creditor's account.

80. Transactions for purchases returns and allowances affecting Accounts Payable are recorded in the
general journal.
ANS: T PTS: 1 DIF: Difficulty: Moderate

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

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

83. Freight charges on store equipment purchased FOB shipping point should be debited to Store
Equipment.

84. Both wholesalers and retailers are types of merchandising companies.

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

86. If the perpetual inventory system is used, an account called Cost of Goods Sold id included in the
general ledger.

MATCHING
Match the terms below with the correct definitions.

a. FOB destination
b. Sales Returns and Allowances
c. Controlling account
d. Accounts receivable ledger
e. Subsidiary ledger
f. Purchases journal
g. Sales invoice
h. FOB shipping point
i. General journal
87. Group of accounts representing the details of a controlling account
88. Title or ownership changes hands when the buyer receives the goods.
89. Account in the general ledger that summarizes the balance of accounts in a subsidiary ledger
90. Account used to record the reduction in sales due to either the physical return of goods or defective
goods
91. Subsidiary ledger that presents the individual accounts of credit customers
92. Buyer responsibility for paying the freight cost.
93. Special journal used for recording the purchase of merchandise on account only
94. Journal in which returns and allowances (on account) are recorded
95. Business form prepared by the seller
87. ANS: E PTS: 1 DIF: Difficulty: Easy

88. ANS: A PTS: 1 DIF: Difficulty: Easy
89. ANS: C PTS: 1 DIF: Difficulty: Easy
90. ANS: B PTS: 1 DIF: Difficulty: Easy
91. ANS: D PTS: 1 DIF: Difficulty: Easy
92. ANS: H PTS: 1 DIF: Difficulty: Easy
93. ANS: F PTS: 1 DIF: Difficulty: Easy
STA: AICPA-FN: Measurement|ACBSP: Special Journals KEY: Bloom's: Knowledge
94. ANS: I PTS: 1 DIF: Difficulty: Easy
95. ANS: G PTS: 1 DIF: Difficulty: Easy
OTHER
Classification
96. Place an X in the column that indicates the journal in which each of the following transactions will be
recorded in.
Sales Purchases General

Item Journal Journal Journal
a. Sold employee refrigerator on account
b. Bought office supplies for cash
c. Sold merchandise for cash
d. Bought office furniture on account
e. Received credit memo for merchandise
returned
f. Sold employee refrigerator on account
g. Issued credit memo for merchandise
returned by customer
h. Recorded and paid month's payroll
i. Paid freight on office furniture
ANS:
Sales Purchases General

Item Journal Journal Journal
a. Sold employee refrigerator on account X
b. Bought office supplies for cash X
c. Sold merchandise for cash X
d. Bought office furniture on account X
e. Received credit memo for merchandise X
returned
f. Sold employee refrigerator on account X
g. Issued credit memo for merchandise X
returned by customer
h. Recorded and paid month's payroll X
i. Paid freight on office furniture X
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-8 |LO: 9-9

NAT: AACSB: Reflective Thinking
97. For the following account titles, indicate if it is used in a periodic, perpetual, or both inventory
system(s) when journalizing transactions by placing an X in the appropriate column.
Periodic Perpetual
Inventory Inventory
Account System System Both
a. Sales
b. Freight In
c. Purchase Returns and Allowances
d. Accounts Payable
e. Cost of Goods Sold
f. Sales Returns and Allowances
g. Merchandise Inventory
h. Purchases
i. Accounts Receivable
ANS:
Periodic Perpetual
Inventory Inventory
Account System System Both
a. Sales X
b. Freight In X
c. Purchase Returns and Allowances X
d. Accounts Payable X
e. Cost of Goods Sold X
f. Sales Returns and Allowances X
g. Merchandise Inventory X
h. Purchases X
i. Accounts Receivable X
PTS: 1 DIF: Difficulty: Moderate

OBJ: LO: 9-2 | LO: 9-3| LO: 9-4| LO: 9-6| LO: 9-7
NAT: AACSB: Reflective Thinking
SHORT ANSWER
98. What is the difference between a periodic and perpetual inventory system for merchandise inventory?
ANS:
The periodic inventory system requires the company to adjust the ending inventory balance at year end
after a physical count. The perpetual inventory system maintains continuous records of inventory in
the Merchandise Inventory account, which provides a current cost balance.
PTS: 1 DIF: Difficulty: Moderate

OBJ: LO: 9-2| LO: 9-3| LO: 9-4| LO: 9-6| LO: 9-7 NAT: AACSB: Communication
99. Assume the general ledger Accounts Receivable controlling account matches the balance of the
schedule of accounts receivable. Is it possible that errors could have occurred anyway? Explain how
this could have occurred or explain why it is impossible for this to have occurred.
ANS:
If the balance of the general ledger Accounts Receivable controlling account matches the balance of
the schedule of accounts receivable, it only means that the two are equal. Several errors could have
occurred. Amounts could have been posted to the incorrect accounts, thus causing an error in the
customer account that received the incorrect charge or credit for payment and an error in the account
that should have received the charge or credit for payment⎯two problems from one error. Arithmetic
errors and transpositions and slides that carry through to the controlling account, as well as to the
subsidiary ledger, can occur. A check or a sales invoice may simply fail to be recorded, causing an
error to the customer account balance, even though everything appears to be in balance.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-2

NAT: AACSB: Communication
KEY: Bloom's: Analysis
100. What are the four most commonly used special journals, and what are they used for?
ANS:
Sales journal − Used to record sales of merchandise sold on account only.
Purchases journal − Used to record purchases of merchandise purchased on account for resale only.
Cash receipts journal − Used to record all transactions that include a debit to Cash, such as cash sales,
checks received, or interest earned on a checking account.
Cash payments journal − Used to record all transactions that include a credit to Cash, such as payments
by check or bank service charges.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-8 | LO: 9-9

NAT: AACSB: Communication
PROBLEM
101. Benton Sports is a retail store selling goods for cash and on a charge account basis. A retail sales tax of
8 percent is applied to all sales. Selected transactions for the month of January are presented below.
Jan. 6 Sold goods on account to C. D. Brannon, invoice no. 1200, $1,260, plus sales tax.
8 Sold goods on account to Bingham School District, invoice no. 1218, $3,420. This
sale is exempt from sales tax.
14 Issued credit memo no. 548 to Bingham School District for merchandise returned,
$690.
17 Issued credit memo no. 549 to C. D. Brannon for merchandise returned, $510, plus
sales tax.
Instructions:
Record the transactions in the sales (page 32) or general journal (page 10), as appropriate.
ANS:
SALES JOURNAL PAGE 32

Accounts Sales Tax
Inv. Post. Receivable Payable Sales
Date No. Customer's Name Ref. Debit Credit Credit
20⎯
Jan. 6 1200 C. D. Brannon 1,360.80 100.80 1,260.00
8 1218 Bingham School
District 3,420.00 3,420.00
GENERAL JOURNAL PAGE 10

Post.
Date Description Ref. Debit Credit
20⎯
Jan. 14 Sales Returns and Allowances 690.00
Accounts Receivable, Bingham
School District 690.00
Issued credit memo no. 548.
17 Sales Returns and Allowances 510.00

Sales Tax Payable 40.80
Accounts Receivable, C. D. Brannon 550.80

NAT: AACSB: Analytic
STA: AICPA-FN: Measurement|ACBSP: Special Journals KEY: Bloom's: Application
102. Black Corporation had the following transactions take place in February of this year:
Feb. 5 Bought merchandise on account from Red Corporation, invoice no. R2510, $623;
terms net 30 days; dated February 3; FOB destination.
15 Bought merchandise on account from Yellow Corporation, invoice no. Y21510,
$1,352; terms net 30 days, dated February 12; FOB shipping point, freight prepaid
and added to the invoice, $88.25 (total $1,440.25).
25 Received credit memo no. 233 for merchandise returned to Red Corporation,
$103.25.
Instructions:
1. Record the transactions in the purchases (page 45) or general journal (page 12), as
appropriate.
2. Open the following accounts in the accounts payable ledger and record the February 1
beginning balances, if any, as given: Red Corporation, $300; Yellow, $665. For the
accounts having balances write “Balance” in the item column and place a check mark in
the Post. Ref. column.
3. Post to the accounts payable ledger and prepare schedule of accounts payable.
ANS:
1.)
PURCHASES JOURNAL PAGE 45 >
>
Invoice Invoice >
Date Supplier's Name No. Date Terms >
20⎯ >
Feb. 5 Red Corporation R2510 2/3 n/30 >
15 Yellow Corporation Y21510 2/12 n/30 >
28 Totals >
< PURCHASES JOURNAL PAGE 45

< Accounts
< Post. Payable Freight In Purchases
< Date Supplier's Name Ref. Credit Debit Debit
< 20⎯
< Feb. 5 Red Corporation  623.00 623.00
< 15 Yellow Corporation  1,352.00 88.25 1,440.25
< 28 Totals 1,975.00 88.25 2,063.25

Post.
20⎯
Feb. 25 Accounts Payable, Red Corporation / 103.25
Purchases Returns and Allowances 103.25
Credit memo no. 233 for return
of merchandise.
2.)
ACCOUNTS RECEIVABLE LEDGER
NAME Red Corporation
ADDRESS 1234 Sun Drive
Phoenix, Arizona 57208
Post.
Date Item Ref. Debit Credit Balance
20⎯
Feb. 1 Balance  330.00
5 P45 623.00 953.00
25 J12 103.25 849.75

NAME Yellow Corporation
ADDRESS 5678 Banana Circle
Phoenix, Arizona 57208
Post.
20⎯
Feb. 1 Balance  665.00
15 P45 1,352.00 2,017.00
3.)
Black Corporation
Schedule of Accounts Payable
February 28, 20⎯
Red Corporation $849.75
Yellow Corporation 2,017.00
Total Accounts Payable $2,866.75
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-4 | LO: 9-5 | LO: 9-9
103. Jane's Animal Haven uses the general journal to record its charge sales invoices instead of a sales
journal. The sales tax rate is 4.5 percent on retail item(s).
Instructions:
1. Record the June 1 balances, if any, in the general ledger as given: Accounts Receivable
113 controlling account, $1,326; Sales Tax Payable 214, Sales 411, $26,852, Sales
Returns and Allowances 412. Write "Balance" in the Item column and place a check
mark in the Post. Ref. column.
2. Open the following accounts in the accounts receivable ledger and record the balances, if
any, as of June 1: J. Green; G. Haas, $656; S. Soudah; L. Wold. For the account having a
balance, write "Balance" in the Item column and place a check mark in the Post. Ref.
column.
3. Record the below transactions in the general journal (page 27) for the total amount of the
charge sales invoices.
4. Post the amounts from the general journal to the general ledger and accounts receivable
ledger. Write the invoice number of each sales invoice in the Post. Ref. column to
indicate that the amounts have been posted.
5. Prepare a schedule of accounts receivable.
June 5 Sold $427 on account to J. Green, invoice no. 714 for boarding.
7 Sold $560, plus sales tax of $11.25, total $571.25 on account to L. Wold, invoice
no. 715 for monthly pet sitting and food.
10 Accepted credit memo no. 124 from L. Wold for return of food worth $50 plus
sales tax of $2.25, total $52.25.
18 Sold $943 on account to S. Soudah, invoice no. 716 for boarding.
21 Sold to J. Green on account, invoice no. 717, animal supplies for $210, plus sales
tax of $9.45, total $219.45.
ANS:

Post.
20⎯
June 5 Accounts Receivable, J. Green 113 / 427.00
Sales 411 427.00

record invoice 714
7 Accounts Receivable, L. Wold 113 / 571.25
Sales 411 560.00

Sales Tax Payable 214 11.25
record invoice 715
10 Sales Returns and Allowances 412 50.00

Accounts Receivable, L. Wold 113 / 52.25
record credit memo 214
18 Accounts Receivable, S. Soudah 113 / 943.00
Sales 411 943.00

record invoice 716
21 Accounts Receivable, J. Green 113 / 219.45
Sales 411 210.00

record invoice 717
GENERAL LEDGER
ACCOUNT Accounts Receivable ACCOUNT NO. 113
Post. Balance
Date Item Ref. Debit Credit Debit Credit
20⎯
June 1 Balance 656.00
5 J27 427.00 1,083.00
7 J27 571.25 1,654.25
10 J27 52.25 1,602.00
18 J27 943.00 2,545.00
21 J27 219.45 2,764.45
GENERAL LEDGER
ACCOUNT Sales Tax Payable ACCOUNT NO. 214
Post. Balance
20⎯
June 7 J27 11.25 11.25
10 J27 2.25 9.00
21 J27 9.45 18.45
ACCOUNT Sales ACCOUNT NO. 411
Post. Balance
20⎯
June 1 Balance 26,852.00
5 J27 427.00 27,279.00
7 J27 560.00 27,839.00
18 J27 943.00 28,782.00
21 J27 210.00 28,992.00
ACCOUNT Sales Returns and Allowances ACCOUNT NO. 412
Post. Balance
20⎯
June 10 J27 50.00 50.00

NAME J. Green
ADDRESS 238 Second Street
Nashville, TN 37201
Post.
20⎯
June 5 J27 427.00 427.00
21 J27 219.45 646.45
NAME G. Haas
ADDRESS 2300 Mockingbird Lane
Hendersonville, TN 37075
Post.
20⎯
June 1 Balance 656.00
NAME S. Soudah
ADDRESS 143 Greenland Drive
Nashville, TN 37205
Post.
20⎯
June 18 J27 943.00 943.00
NAME L. Wold
ADDRESS 140 Osbourne Street
Murfreesboro, TN 37129
Post.
20⎯
June 7 J27 571.25 571.25
10 J27 52.25 519.00
Jane's Animal Haven

Schedule of Accounts Receivable
June 30, 20⎯
J. Green $646.45
G. Haas 656.00
S. Soudah 943.00
L. Wold 519.00
Total Accounts Receivable $2,764.45
PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 9-2 | LO: 9-3

104. The following transactions relate to Hatfield Company, a furniture wholesaler, during August of this
year. Terms of sale are 2/10, n/30. The company is located in Dallas, Texas.
Aug. Sold merchandise on account to Rangel Company, invoice no. 200, $752.25. The
3 cost of merchandise was $488.75.
8 Bought merchandise on account from Carpenter Company, invoice no. 82, $510;
terms 2/10, n/30; dated August 3; FOB Denver, freight prepaid and added to the
invoice, $58 (total $568).
10 Received credit memo no. 12 for merchandise returned to Carpenter Company for
$75.91.
16 Sold merchandise on account to Knapp Company, invoice no. 201, $1,183.75. The
cost of merchandise was $762.10.
22 Issued credit memo no. 80 to Knapp Company for merchandise return of $249.38.
The cost of merchandise was $160.55.
28 Bought merchandise on account from Wheeler Company, invoice no. 856,
$1,798.26; terms n/30; dated August 25; FOB Orlando, freight prepaid and added to
the invoice, $125 (total $1,923.26).
Instructions:
Record the transactions in the general journal (page 1) using the perpetual inventory system.
ANS:

Post.
20⎯
Aug. 3 Accounts Receivable, Rangel Company 752.25
Sales 752.25
Sold merchandise to Rangel
Company, invoice no. 200.
3 Cost of Goods Sold 488.75

Merchandise Inventory 488.75
Cost of merchandise sold to
Rangel Company.
8 Merchandise Inventory 568.00

Accounts Payable, Carpenter
Company 568.00
Purchased merchandise from
Carpenter Company, invoice no.
82, invoice dated 8/3, terms
2/10, n/30.
10 Accounts Payable, Carpenter

Company 75.91
Credit memo no. 12 for return of
merchandise.
16 Accounts Receivable, Knapp Company 1,183.75

Sales 1,183.75
Sold merchandise to Knapp
Company, invoice no. 201.
16 Cost of Goods Sold 762.10

Cost of merchandise sold to
Knapp Company, invoice no. 201.
22 Sales Returns and Allowances 249.38

Accounts Receivable, Knapp
Company 249.38
22 Merchandise Inventory 160.55

Cost of Goods Sold 160.55
Cost of merchandise returned,
credit memo no. 80.
28 Merchandise Inventory 1,923.26

Accounts Payable, Wheeler
Company 1,923.26
Purchased merchandise from
Wheeler Company, invoice no.
856, invoice dated 8/25, terms
n/30.

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College Accounting Chapters 1-24 11th

Edition Nobles Test Bank

2. A one-column sales journal may be used to record

4. Which of the following is recorded in the sales journal?

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

7. The purpose of an accounts receivable ledger is

9. The schedule of accounts receivable shows

15. The purchases journal is used for the purchase of

19. Entries in the purchases journal are posted to the

24. A controlling account can be found in the

29. Freight charges may be

30. A contra-revenue account to record returned goods is:

31. Type of account and normal balance of Sales Discount:

32. An account that is used to record merchandise bought for resale:

33. Account type and normal balance of the Purchases Account:

43. A company’s written offer to buy goods:

44. A subsidiary ledger that contains individual accounts of creditors.

53. What is the correct entry to record sales tax collected:

54. A schedule of Accounts Receivable is prepared from:

58. Merchandising companies include

ANS: F PTS: 1 DIF: Difficulty: Easy

61. Cash sales are recorded in the sales journal.

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: F PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: T PTS: 1 DIF: Difficulty: Easy

ANS: F PTS: 1 DIF: Difficulty: Moderate

ANS: T PTS: 1 DIF: Difficulty: Easy

Match the terms below with the correct definitions.

87. ANS: E PTS: 1 DIF: Difficulty: Easy

Sales Purchases General

Sales Purchases General

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-8 |LO: 9-9

PTS: 1 DIF: Difficulty: Moderate

PTS: 1 DIF: Difficulty: Moderate

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-2

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-8 | LO: 9-9

SALES JOURNAL PAGE 32

GENERAL JOURNAL PAGE 10

17 Sales Returns and Allowances 510.00

PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 9-2 |LO: 9-8

< PURCHASES JOURNAL PAGE 45

GENERAL JOURNAL PAGE 12

ACCOUNTS RECEIVABLE LEDGER