Deck 9: Sales and Cash Receipts

Question 1

Net sales equal:

A)gross sales.
B)gross sales - sales returns and allowances.
C)gross sales - sales returns and allowances - sales discounts.
D)sales discounts.

Answer 1

C

Question 2

Credit terms of 1/10,n/30 mean that:

A)1% discount is allowed if the bill is paid within between 10 and 30 days.
B)a 1% discount is allowed if the bill is paid within 30 days.
C)a 1% discount is allowed if the bill is paid after 10 days.
D)a 1% discount is allowed if the customer pays the bill within 10 days,or the entre amount is due within 30 days.

Answer 2

D

Question 3

The liability account used to record sales tax owed is:

A)Sales Tax Expense.
B)Prepaid Taxes.
C)Sales Tax Payable.
D)Sales.

Answer 3

C

Question 4

The time frame when customers are allowed to pay their bills and still be eligible for a discount is the:

A)credit period.
B)discount period.
C)closing period.
D)due date.

Question 5

Lisa's Blankets and Bedding had a sale of $350 to a charge customer,terms 1/15,n/30.Lisa should record this transaction as follows:

A)debit Accounts Receivable $350; credit Sales $350.
B)debit Cash $350; credit Sales $350.
C)debit Accounts Receivable $346.50; debit Sales Discounts $3.50; credit Sales $350.
D)debit Sales $350; credit Accounts Receivable $350.

Question 6

Hardware Restoration reports net sales of $50,000.If sales returns and allowances are $10,000 and sales discounts are $1,500,what are gross sales?

A)$50,000
B)$61,500
C)$58,500
D)$38,500

Question 7

The normal balance of the Sales Returns and Allowances account is:

A)a credit.
B)a debit.
C)zero.
D)It doesn't have a normal balance.

Question 8

A characteristic of the account,Sales Discount,is:

A)debit balance.
B)contra-revenue account.
C)records the cash discounts granted to customers.
D)All of the above are correct.

Question 9

The length of time the customer is allowed to repay the bill is the:

A)discount period.
B)closing period.
C)credit period.
D)due date.

Question 10

A contra-revenue account with a debit balance for returned goods is called:

A)Sales Returns and Allowances.
B)Sales Discount.
C)the credit period.
D)the discount period.

Question 11

Merchandise is:

A)the same as inventory.
B)an asset.
C)the same as gross sales.
D)Both A and B are correct.

Question 12

Kristi's pottery sold 200 tiles at $25.00 each to a charge customer,terms 1/10,n/30.Which entry is required to record this transaction?

A)Debit Cash for $5,000; credit Tile Sales for $5,000
B)Debit Accounts Receivable for $4,050; credit Tile Sales for $4,050
C)Debit Accounts Receivable for $4,050; debit Sales Discount for $50.00,and credit Tile Sales for $5,000
D)Debit Accounts Receivable for $5,000; credit Tile Sales for $5,000

Question 13

Sales Tax Payable is a:

A)liability account with a debit balance.
B)liability account with a credit balance.
C)contra-asset account with a debit balance.
D)contra-asset account with a credit balance.

Question 14

Merchants who buy goods from wholesalers for resale to customers are:

A)merchandisers.
B)retailers.
C)service companies.
D)None of the above are correct.

Question 15

Unlimited Materials sold goods for $2,000 plus 6% sales tax to a charge customer,terms n/30.Which entry is required to record this transaction?

A)Debit Accounts Receivable for $2,120; credit Sales Tax Payable $120 and credit Sales for $2,000
B)Debit Cash for $2,000; credit Sales for $2,000
C)Debit Accounts Receivable for $2,000; credit Sales for $2,000
D)Debit Accounts Receivable $2,120; credit Sales,$2,120

Question 16

The side that increases the balance of the Sales Discount account is:

A)a credit.
B)a debit.
C)zero.
D)It does not have a normal balance.

Question 17

Gross sales equals:

A)net sales minus sales discount.
B)sales discount less net income.
C)the total of cash sales and credit sales.
D)net income plus gross profit.

Question 18

R&R Lumber reports gross sales of $70,000.If sales returns and allowances are $10,000 and sales discounts are $3,000,what are the net sales?

A)$83,000
B)$63,000
C)$57,000
D)$70,000

Question 19

A characteristic of Sales Returns and Allowances is that:

A)it has a debit balance.
B)it tracks returns from customers.
C)it is a contra-revenue account.
D)All of these answers are correct.

Question 20

A reduction given to customers for early payment is a:

A)sales returns and allowance.
B)purchase discount.
C)sales discount.
D)purchase return.

Question 21

Customer returned merchandise for credit.This will be recorded with:

A)a debit to an asset account.
B)a debit to a liability account.
C)a credit to an asset account.
D)None of these are correct.

Question 22

Urban Camping sold goods for $200 to a charge customer.The customer returned for credit $90 worth of goods.Which entry is required to record the return transaction?

A)Debit Sales Returns and Allowances $90; credit Accounts Receivable for $90
B)Debit Sales Returns and Allowances for $90; credit Sales for $90
C)Debit Sales $90; credit Sales Returns and Allowances $90
D)Debit Accounts Receivable $90; credit Sales Returns and Allowances for $90

Question 23

The document indicating to the customer that the seller is reducing the amount owed by the customer is:

A)credit memorandum.
B)sales discount.
C)sales returns and allowances.
D)schedule of accounts receivable.

Question 24

Sales discounts are not taken on which of the following?

A)Sales Tax
B)Freight
C)Merchandise returned
D)Sales Discounts are not taken on any of the above.

Question 25

The normal balance of Sales Tax Payable is a credit.

Question 26

Secret Trails received payment in full within the credit period for horse boarding for $900 plus 6% sales tax.Terms of the sale were 2/10,n/30.Which entry is required to record this payment?

A)Debit Cash,$900; credit Accounts Receivable Sales,$900
B)Debit Cash,$936; debit Sales Discount $18; credit Accounts Receivable,$954
C)Debit Cash,$954; credit Sales,$954
D)Debit Cash,$936; credit Sales,$936

Question 27

Logan's Art studio was moving and sold furniture that was no longer needed for cash.The entry would include:

A)a credit to Sales.
B)a debit to Sales.
C)a credit to Furniture.
D)a debit to Furniture.

Question 28

Monica's Closet received payment in full for goods sold within the discount period on a $500 sales invoice,terms 2/10,n/30.Which entry records this payment?

A)Debit Accounts Receivable; credit Sales for $500
B)Debit Cash; credit Accounts Receivable for $500
C)Debit Cash for $490,debit Sales Discount for $10; and credit Sales for $500
D)Debit Cash for $490,debit Sales Discount for $10; and credit Accounts Receivable for $500

Question 29

Sue's Jewelry sold 20 necklaces for $25 each to a credit customer.The invoice included a 6% sales tax and payment terms of 2/10,n/30.In addition,5 necklaces were returned prior to payment.The entry to record the original sale would include:

A)a debit to Accounts Receivable for $530.
B)a debit to Accounts Receivable for $500.
C)a debit to Sales for $530.
D)a debit to Sales for $500.

Question 30

A wholesale customer returned merchandise having already paid for it within the cash discount period.The return will be recorded with:

A)a credit to an asset account.
B)a credit to a liability account.
C)a credit to Capital.
D)None of these are correct.

Question 31

Net Sales equals Gross Sales - Sales Returns and Allowances - Cash Sales.

Question 32

A sales discount correctly taken by the charge customer was debited to Sales at the time the entry was recorded.This error will cause:

A)the net income for the period to be overstated.
B)the net income for the period to be understated.
C)the sales discount account to be understated.
D)the sales account to be overstated.

Question 33

Sold merchandise on account would be recorded with:

A)a debit to an asset account.
B)a debit to a liability account.
C)a debit to Capital.
D)None of these are correct.

Question 34

The contra-revenue accounts include:

A)Sales Tax Payable.
B)Sales Returns and Allowances.
C)Sales Discount.
D)Both B and C are correct.

Question 35

Zach returned $200 of merchandise to Secret Trails.His original purchase was $400,with terms 1/10,n/30.If Justin pays the balance of his account after the discount period,how much should he pay?

A)$204.00
B)$196.00
C)$200.00
D)$400.00

Question 36

If management wanted to determine if customers were returning goods at a higher rate than usual it could use the Sales Returns and Allowances account to analyze the information.

Question 37

The total of all cash sales and credit sales equals:

A)net sales.
B)gross sales.
C)sales discount.
D)sales returns and allowances.

Question 38

The arrangements between buyer and seller as to when payments for merchandise are to be made are called:

A)credit terms.
B)net cash.
C)cash on demand.
D)gross cash.

Question 39

Medeco sold goods for $100 to a charge customer.The customer returned for credit $25 worth of goods.Terms of the sale were 1/10,n/30.If the customer pays the amount owed within the discount period,what is the amount the customer should pay?

A)$74.25
B)$75.00
C)$100.00
D)$90.00

Question 40

Merchandise sold on credit was returned for credit and recorded with a debit to Sales Returns and Allowances and a credit to Accounts Payable.This error will cause:

A)the net income for the period to be overstated.
B)the net income for the period to be understated.
C)the assets to be overstated.
D)the liabilities to be understated.

Question 41

Sales Returns and Allowances is a contra-asset.

Question 42

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 43

Compare and discuss a discount period versus a credit period.

Question 44

Sales Discounts and Sales Returns and Allowances are expense accounts.

Question 45

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 46

When a customer returns defective office supplies the Sales Returns and Allowances account will be debited.

Question 47

The Sales Returns and Allowances account is contra-revenue.

Question 48

Explain why the account Sales Tax Payable is credited when a sale is made subject to a sales tax?

Question 49

If cash flow is so important to merchandisers,why do they extend credit to their customers?

Question 50

The time a customer is granted to pay the bill is the discount period.

Question 51

Sales is a revenue account.

Question 52

Sales tax collected by the seller increases the seller's total revenue.

Question 53

Terms of 3/10,n/30 means that a customer is allowed a 10% discount in 30 days.

Question 54

Calculate gross sales:
net sales = $100,000
sales returns and allowances - $25,000
sales discounts - $20,000
accounts receivable - $12,000

Question 55

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 56

Use the following information to answer the questions below:
The Net Sales are ________.

Question 57

Sales Discounts is an expense account.

Question 58

Sales Tax Payable represents an asset on the books of the seller.

Question 59

If a customer returns merchandise,the income for that period will be reduced.

Question 60

Determine the amount of net sales given:
gross sales = $200,000
sales discounts = $25,000
sales returns and allowances = $40,000
$ ________

Question 61

Sue's Jewelry sold 30 necklaces for $25 each to a credit customer.The invoice included a 6% sales tax and payment terms of 2/10,n/30.In addition,5 necklaces were returned prior to payment.The entry to record the return would include:

A)a debit to Sales Returns and Allowances for $132.50.
B)a debit to Sales Returns and Allowances for $125.00.
C)a credit to Sales Tax Payable for $7.50.
D)a debit to Accounts Receivable for $132.50.

Question 62

Explain why,when a customer returns merchandise after it was paid for,he/she may or may not receive credit equal to the invoice value of the merchandise returned.

Question 63

If a credit memorandum is issued,what account will be decreased on the seller's books?

A)Accounts Receivable
B)Accounts Payable
C)Sales Discount
D)Sales Returns and Allowances

Question 64

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 65

Received payment,within the discount period,for merchandise sold previously.This will be recorded with:

A)a credit to an asset account.
B)a debit to a liability account.
C)a debit to Capital.
D)None of these are correct.

Question 66

Determine the amount of cash collected on a credit sale with a price of $80,000 and credit terms of 1/10,n/30,assuming the payment was after the discount period had expired.
$ ________

Question 67

The return of merchandise by a credit customer was recorded with a debit to Accounts Payable and a credit to Accounts Receivable and the subsidiary ledger.This error will cause:

A)the net income for the period to be overstated.
B)the net income for the period to be understated.
C)the control account to not agree with the subsidiary ledger.
D)the assets to be overstated.

Question 68

Sue's Jewelry sold 30 necklaces for $25 each to a credit customer.The invoice included a 6% sales tax and payment terms of 2/10,n/30.In addition,5 necklaces were returned prior to payment.The entry to record the payment would include:

A)a credit to Cash for $625.00.
B)a credit to Cash for $662.50.
C)a credit to Accounts Receivable for $625.00.
D)a credit to Accounts Receivable for $662.50.

Question 69

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 70

Collected a payment from a credit customer.This will be recorded with:

A)a credit to an asset account.
B)a credit to a liability account.
C)a credit to Capital.
D)None of these are correct.

Question 71

Determine the amount to be paid within the discount period for a previous sale with an invoice price of $10,000,subject to credit terms of 1/10,n/30.
$ ________

Question 72

Sales Returns and Allowances is a contra-revenue account with a normal credit balance.

Question 73

If a credit memorandum is issued,what account will be increased on the seller's books?

A)Accounts Receivable
B)Accounts Payable
C)Sales Discount
D)Sales Returns and Allowances

Question 74

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 75

The credit period is longer than the discount period.

Question 76

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 77

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 78

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, and in column 3 the financial statement on which the account balance is reported.

Question 79

Sold Merchandise for Cash subject to a sales tax accepting cash.This will be recorded with:

A)a credit to an asset account.
B)a debit to a liability account.
C)a debit to Capital.
D)None of these are correct.

Question 80

Sold merchandise subject to a sales tax,accepting cash.This will be recorded with:

A)a credit to an asset account.
B)a credit to a liability account.
C)a debit to Capital.
D)None of these are correct.