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Which of the following describes the Sales Tax Payable account?
Multiple Choice
 
A liability account with a normal credit balance
A liability account with a normal debit balance.
A revenue account with a normal credit balance.
An asset account with a normal debit balance.
   
Merchandise is sold on credit for $1,600 plus 6 percent sales tax. The journal entry to record the sale will include a debit to Accounts Receivable for
 
$1,504.00. 
$1,696.00
$1,600.00. 
$2,560.00.
   
All of the following are examples of the most common types of credit sales, except
 
closed-account credit cards
business credit cards.
bank credit cards.
cards issued by credit card companies.
   
Modern Candy, a wholesaler, sold a crate of candy for $360.00 on account to a customer with credit terms of 1/10, n/30. If the customer pays within the discount period, how much cash will Modern Candy receive when it is paid?
 
$360.00
$356.40
$363.60
$324.00
   
The Sales account is classified as
 
a liability account.
an asset account.
a revenue account
a contra revenue account.
   
The amount of the trade discount taken by the customer is:
 
recorded as an expense.
recorded as a revenue.
recorded as a liability.
not recorded directly as sales are recorded net of trade discounts.
   
A credit policy that is too tight may result in
 
high level of losses at the expense of increases in sales volume.
high level of losses at the expense of decreases in sales volume.
low level of losses at the expense of increases in sales volume
low level of losses at the expense of decreases in sales volume.
   
The balance due from an individual customer can be found in:
 
the general journal.
the Sales account in the general ledger.
the Accounts Receivable account in the general ledger.
the accounts receivable subsidiary ledger
   
Kay Sadia sold merchandise for $7,200 subject to a 8% sales tax. The entry in the general journal will include a debit to Accounts Receivable for:
 
$6,624.00.
$7,200.00.
$7,776.00
$12,960.00.
   
A wholesale business sells goods with a list price of $800 and a trade discount of 36 percent. The net sales price is
 
$288.00.
$800.00.
$512.00
$1,088.00.
   
Hour Place Clock Shop sold a grandfather clock for $3,750 subject to a 7% sales tax. The entry in the general journal will include a credit to Sales for
 
$3,625.00.
$4,012.50.
$3,487.50.
$3,750.00
   
A company that earns income by buying merchandise then reselling it to its customers in the same condition in which it was purchased is a(n)
 
merchandising business
service business.
non-for profit business.
manufacturing business.
   
Hugh Snow, the buyer, returned merchandise to Farley Co., the seller.
The entry on the books of Farley company to record the return of merchandise from Hugh Snow would include a:
 
Debit to Accounts Payable
Credit to Sales Returns and Allowances
Debit to Account Receivable
Debit to Sales Returns and Allowances
   
A retailer recorded the following in June: cash sales $2,000; credit sales, $9,000; sales returns and allowances,
$1,000. Assuming the sales tax rate is 8 percent, the entry to record the sales tax payment includes a debit to Sales Tax Payable for
 
$800.
$880
$640.
$720
   
A firm that sells goods that it purchases for re-sale is a
 
merchandising business
service business.
manufacturing business.
non-profit business.
   
If a firm had sales of $84,000 during a period and sales returns and allowances of $6,000, its net sales were
 
$78,000
$84,000.
$90,000.
$6,000.
   
After all postings have been made, the total of the schedule of accounts receivable should equal
 
the balance of the Sales account.
the balance in the Accounts Payable account in the general ledger.
the total of all sales on account for the accounting period.
the balance of the Accounts Receivable account in the general ledger
   
Which of the following is not one of the three basic types of businesses?
 
Service
Merchandising
Manufacturing
International
   
On June 12, Music, Inc. sells $4,000 of goods on account to a credit customer with credit terms of 1/10, n/30.
If the customer pays on June 20, select the correct entry to record the receipt of the customer's payment:
 
                                                 
Cash                 4,000                
Accounts Receivable                                       4,000
                                                 
Accounts Receivable               3,960                
Sales Discounts                       40                     
Cash                                         4,000
                                                 
Cash                 4,000                
Sales Discounts                                               40
Accounts Receivable                                       3,960
                                                 
Cash                3,960                
Sales Discounts                       40                     
Accounts Receivable                                     4,000
   
Lamps Unlimited, a wholesaler, sold several crates of lighting for $1,500 on account to a customer with credit terms of 1/10, n/30.
If the customer pays within the discount period, the journal entry to record the receipt of payment would include:
 
a credit to Accounts Receivable for $1,500.
a debit to Accounts Receivable for $1,485.
a debit to Sales Discounts for $150
a credit to Sales Discounts for $15.
 

A ledger that contains accounts of a single type, such as an account receivable ledgers for each customer,
is known as a ___________ ledger.
 
subsidiary
   
A company that purchases goods for resale is called a ____________ company.
 
merchandising
   
Subsidiary ledgers may contain accounts for which of the following:
 
vendors
customers
 

Big Door Co. sold a garage door to Roxy's Repairs on credit and issued Sales Slip 212 for $8,000 plus sales tax of $800.
The entry to record this transaction will include a credit to sales in the amount of
 
8,000
   
Ellis Office Supplies sold a printer to Mary Van on credit; issued Sales Slip 112 for $120.
The entry to record this transaction will include a:
 
debit to accounts receivable for $120
credit to sales for $120
   
Gabby Window Supply Co. sold a window to Andy Prose on credit; issued Sales Slip 357 for $800.
The entry to record this transaction will include a credit to ____.
 
sales
   
A company's acceptance of a return of goods from a customer is called a
 
sales return
   
Kelly Pet Supplies sold a crate of cat food to Paws Pet Store on credit; issued Sales Slip 896 for $1,200.
The entry to record this transaction will include a credit to:
 
Sales for $1,200
   
Best Computers sold a computer to Lee Jones on credit and issued Sales Slip 211 for $900 plus sales tax of $90.
The entry to record this transaction will include a:
 
credit to sales for $900
credit to sales tax payable for $90
debit to accounts receivable for $990
   
Identify the reason(s) that accountants use a sales returns and allowances account:
 
to keep a complete record of sales returns and allowances
to calculate operating efficiency
   
A note verifying that a customer's account is being reduced by the amount of a sales return or sales allowance plus any sales
tax that may have been involved is called a
 
Credit memorandum
   
A company's acceptance of a return of goods from a customer is called a
 
sales return
   
Cozy Mattresses sold a mattress set to Gloria Hernandez on credit and issued Sales Slip 193 for $1,000 plus sales tax of $100.
The entry to record this transaction will include a credit to:
 
sales for $1,000
   
The most common types of credit sales include the following:
 
open accounts
business credit cards
cards issued by credit card companies
bank credit cards
   
The effect of a sales return on a company's financial statements is a(n):
 
decrease in net income
   
Sales returns and allowances is a ______ revenue account and has a normal (debit/credit) _______ balance.
 
contra; debit
   
A credit policy that is too lenient results in:
 
increased sales volume accompanied by a high level of losses
   
Gabby Window Supply Co. sold a window to Andy Prose on credit; issued Sales Slip 357 for $800. The entry to record this transaction will include a credit to ____.
 
sales
   
Sales returns and allowances is a contra revenue account and has a normal
 
debit balance
   
Kelly Pet Supplies sold a crate of cat food to Paws Pet Store on credit; issued Sales Slip 896 for $1,200.
The entry to record this transaction will include a credit to:
 
sales for $1,200
   
A bike sales company accepted a return of one damaged bike from Sana Gill that was originally sold on credit on Sales Slip 239 for $440,
which included sales tax of $40. The return transaction will include which of the following entries:
 
debit to sales tax payable for $40
debit to sales returns and allowances for $400
credit to accounts receivable for $440
   
Which of the following is recorded in an accounts receivable subsidiary ledger?
running balance
customer address
debits and credits to a customer's accounts receivable
   
A company's records showed the following for the month of June: Sales $15,000; Sales Returns and Allowances $3,000; Cost of Goods Sold $4,000. Net sales equal:
12,000
   
An account that serves as a link between the subsidiary ledger and the general ledger, and whose balance summarizes the balances of its related accounts in the subsidiary ledger is called a account.
control
   
A window sales company accepted a return of one damaged window from Dorian Lee that was originally sold on Sales Slip 425 for $880,
which included sales tax of $80. The return transaction will include a debit to:
sales returns and allowances for $800
   
Gabby Window Supply Co. sold a window to Andy Prose on credit; issued Sales Slip 357 for $800.
The entry to record this transaction will include a credit to
 
Sales
   
On July 2, Pinto Inc. sells merchandise for $1,100 on account to Martin Inc. with terms 1/10, n/30. On July 5, Martin returned $200 of merchandise
and received a credit memorandum. On July 9, Martin paid the balance owed.
The journal entry to record the receipt of the payment will include a debit to:
 
sales discount
cash
   
Which of the following is not recorded in an accounts receivable subsidiary ledger?
 
credit amounts for sales and sales tax payable
   
Which document is necessary to prepare the schedule of accounts receivable?
 
Accounts receivable subsidiary ledger
   
On July 2, Pinto Inc. sells merchandise for $1,100 on account to Martin Inc. with terms 1/10, n/30. On July 5, Martin returned $200 of merchandise
and received a credit memorandum. On July 9, Martin paid the balance owed. The journal entry to record the receipt of the payment will include a credit to:
 
accounts receivable
   
Modern Candy, a wholesaler, sold a crate of candy for $600 on account to a customer with credit terms of 3/20, n/60. If the customer pays within the
discount period, how much cash will Modern Candy receive when it is paid?
 
480
   
Which of the following accounts is credited when recording the portion of sales tax that the state government permits a retailer to keep?
 
miscellaneous income
   
Modern Candy, a wholesaler, sold a crate of candy for $360.00 on account to a customer with credit terms of 1/10, n/30. If the customer
pays within the discount period, what would be the total amount credited to the sales account?
 
360.00
   
A discount offered to customers based on volume is known as a ________ discount.
 
trade
   
A bank credit card sale will be recorded with a debit to which account:
 
cash
   
On June 2, ADG Inc. sells merchandise for $900 on account to eSales Inc. with terms 1/10, n/30. On June 5, eSales returned $100 of
merchandise and received a credit memorandum. On June 9, eSales paid the balance owed in the amount of
 
792
   
A discount offered to customers based on volume is known as a ________ discount.
 
trade
   
The accounts receivable account is a control account for the subsidiary ledger.
 
true