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Exam 6: Special Journals and Subsidiary Ledgers: the Basics: Sales and Cash

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Question 21

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The decision to allow a customer credit terms is sometimes risky.

A) True
B) False

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Question 22

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Fruit & Company sells fruit in large quantities on account, uses a perpetual inventory system and a sales journal. Standard terms of sale are 2/10, n/30. Record the following transactions for the month of April, 2020 in the journal provided. Total the columns for the month. Transactions: April 2 Sold $\$ 300$ of Apples and $\$ 500$ of Oranges to ABC Company, cost $\$ 640$ . April 5 Sold $\$ 400$ of Apples, $\$ 600$ of Bananas plus $\$ 700$ of Oranges to WMS Company, cost $\$ 1,445$ . April 10 Sold $\$ 200$ of Apples plus $\$ 800$ of Bananas to $X Y Z$ Company, cost $\$ 790$ . April 14 Sold $\$ 350$ of Apples, $\$ 450$ of Bananas plus $\$ 300$ of Oranges to WMS Company, cost $\$ 935$ . April 21 Sold $\$ 150$ of Apples and $\$ 750$ of Oranges to ABC Company, cost $\$ 788$ . April 23 Sold $\$ 600$ of Bananas plus $\$ 700$ of Oranges to $X Y Z$ Company, cost $\$ 1105$ . April 28 Sold $\$ 800$ of Apples, $\$ 500$ of Bananas plus $\$ 900$ of Oranges to WMS Company, cost $\$ 1,870$ . Here is the Sales Journal for April, 2020:

	Account		Accts. Rec., Dr.	Cost of Goods Sold, Dr.
Date	Debited	Terms	Sales, Cr.	Inventory, Cr.
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________
________	________	________	________	________

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Account Accts. Rec. Dr. Cost of Goods So...

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Question 23

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Posting to the general ledger from the special journals should be done at the end of the month.

The following are selected transactions for P. Pratt Company. For each transaction, indicate the account(s) to be debited and the account(s) to be credited. Also indicate in which of the following journals each transaction will be recorded Sales Journal (S), Cash Receipts Journal (CR), or General Journal (GJ).

Account(s)	Account(s)
Debit	Credit	Journal
________	________	________	a.	Sold merchandise on account to M. Mahar.
________	________	________	b.	P. Pratt invested additional cash in the business
________	________	________	c.	Received payment from M. Mahar. No discount was given.
________	________	________	d.	Made a cash sale.
________	________	________	e.	Issued a credit memo to B. Briggs. Goods returned to inventory.

Credit terms remain the same from company to company.

Which account is not used with a perpetual inventory system?

The sundry accounts column in the cash receipts journal is a miscellaneous accounts column that provides flexibility for recording infrequent transactions.

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

Refer to the Fruit & Company question above. What is the Gross Profit for the month?

A special ledger for the controlling account in the general ledger would be called a subsidiary ledger.

The main reason most businesses do not use only a General Journal is

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.

Refer to the Fruit & Company question above. What amount would the ABC Company owe at month end, assuming no payments were received?

Posting to the general ledger from the special journals should be done at the end of each day.

Which of the following statements about subsidiary ledgers is most accurate?

The Coral Co. had the following transactions involving the sale of merchandise. You are to prepare the necessary general journal entries using the perpetual inventory system. All sales are subject to credit terms of 1/10, n/30. -July 20 Taylor Co. returned merchandise in good condition with an invoice price of $1,000 and a cost of $800. ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________ ________

Medeco sold goods for $75 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?

When a customer pays an account, the transaction would be recorded in the

Gross Sales equals all the cash and credit sales made by a business for a specific period.

When using a subsidiary ledger, the Accounts Receivable account in the general ledger is called the