Question

7. The Inventory account is used in each of the following except the entry to record A) goods purchased on account. B) the return of goods purchased. C) payment of freight on goods sold. D) payment within the discount period. 8. Mclntyre Company made a purchase of merchandise on credit from Marvin Company on August 8, for $8,000, terms 3/10, n/30. On August 17, McIntyre makes the appropriate payment to Marvin. The entry on August 17 for McIntyre Company is: A) Accounts Payable 8,000 8,000 Cash 7,760 B) Accounts Payable Cash 7,760 C) Accounts Payable 8,000 240 7,760 Purchases Returns and Allowances Cash D) Accounts Payable Inventory Cash 8,000 240 7,760 9. The collection of a $4,000 account within the 2 percent discount period will result in a A) debit to Sales Discounts for $80. B) debit to Accounts Receivable for $3,920. C) credit to Cash for $3,920, D) credit to Accounts Receivable for $3,920. 10. The journal entry to record a credit sale is A) Cash Sales Revenue B) Cash Service Revenue C) Accounts Receivable Service Revenue D) Accounts Receivable Sales Revenue

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Answer 1

7. D: Payment within the Discount period $ 8,000 8. Option C Accounts payable Purchase returns & allowances Cash $ $ 240 7,760 9. Option A Debit to Sales Discount 80 (4000*2%) '10. Option D Accounts Receivable Sales Revenue Sale '11. Option C The customer can deduct a 2% discount if the bill is paid within 10 days of the invoice Date '12. Option C Sales Revenue is Credit Balance '13. Option A Freight Out 14. Option D Net Sales - Cost of Goods Avaliable for Sales '15. Option B Income from Operations: Revenues Less:Cost of Goods Sold Gross Profit Less: Operating Expenses Income from Operations: 60000 -30000 30000 -12000 18000