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Exam 8: Accounting for Purchases and Accounts Payable

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Question 1

Multiple Choice

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A bill received for goods purchased

A) Cost of goods sold
B) Freight In account
C) Purchase allowance
D) Purchase invoice
E) Purchase order
F) Purchase requisition
G) Purchase return
H) Purchases account
I) Purchases discount
J) Purchases journal
K) Receiving report
L) Sales discount
M) Sales invoice
N) Schedule of accounts payable

O) I) and L)
P) B) and J)

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Question 2

Multiple Choice

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The type of account and normal balance of Purchase Returns and Allowances is a(n) :

A) contra revenue account, credit balance.
B) contra cost of goods sold account, credit balance.
C) expense account, credit balance.
D) asset account, debit balance.

E) A) and D)
F) None of the above

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Question 3

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On June 30, 2019, the general ledger of the Shoe Closet, a retail store, showed the following balances: Purchases $19,000; Freight In, $500; Purchases Returns and Allowances, $900. Determine the following: A)What was the delivered cost of purchases for June? B)What was the net delivered cost of purchases for June?

During March a firm purchased $36,500 of merchandise and paid freight charges of $5,280. If the net delivered cost of purchases at the end of March is $33,080, what is the total purchase returns for March?

If a company uses a perpetual inventory system when recording its purchases and sales of inventory, the entry to record the freight charges on a purchase of merchandise on account would include:

For each of the transactions listed below, select the journal that should be used to record the transaction. Use CR for cash receipts journal, CP for cash payments journal, S for sales journal, P for purchases journal, and G for general journal. -Received an allowance for some merchandise that was slightly damaged but can be sold at a reduced price. Received a credit memorandum.

Explain each of the following credit terms. A)n/30 B)n/10 EOM C)2/10, n/30 D)1/10, n/20 E) 3/5, n/30

For each of the transactions listed below, identify the journal that should be used to record the transaction. Use CR for cash receipts journal, CP for cash payments journal, S for sales journal, P for purchases journal, and G for general journal. A)Issued a check to a supplier as a payment on account. B)Received an allowance for some merchandise that was slightly damaged but can be sold at a reduced price. Received a credit memorandum. C)Returned some damaged merchandise to a supplier and received a credit memorandum. D)Purchased merchandise with terms of net 30 days. E) Purchased merchandise with terms of 2/10, n/30. The supplier's invoice includes a freight charge.

The source document for recording a purchase of merchandise on credit is:

When the sales department needs goods, it sends the purchasing department a form called:

In a firm that uses special journals, the purchase of merchandise with terms of 2/10, n/30 is recorded in the:

Tune Tones Instrument Tuning Company owes Mandy Lynn's Music Studio $5,280 as of November 1. During November Tune Tones purchased merchandise from Mandy Lynn totaling $10,180 and made payments on account to Mandy Lynn in the amount of $6,300. The amount Tune Tones owes Mandy Lynn on November 30 is:

Individual creditor's accounts in the accounts payable subsidiary ledger normally have ________ balances.

The Fast Frame Shop had the following transactions for the month of January 2019. Record the transactions on page 7 of a purchases journal and page 9 of a general journal. Total, prove, and rule the purchases journal as of January 31. 14 Returned defective frames to Murphy Company and received Credit Memorandum 103 for $50. The frames were originally purchased on Invoice 454 of January 3. 15 Purchased mats for $400 from Wilson Company Products, Invoice 299, dated January 11, net payable in 30 days. 22 Received Credit Memorandum 496 for $150 from Gunther Glass. The amount is an allowance for slightly discolored but usable glass purchased on Invoice 566 of January 5.

Purchases of supplies on credit that are to be used in the business are entered in:

Purchases of merchandise on credit should be recorded in the ________ journal.

The purchases journal for Carothers Company is shown below. Describe how the amounts would be posted to the general ledger accounts.

In a firm that uses special journals, the purchase of merchandise for cash is recorded in the:

One of the supplier accounts from the accounts payable ledger for Allen Company is shown below. Explain each of the entries that have been posted to this supplier's subsidiary ledger account.

When an accounts payable subsidiary ledger is used, the entry to Accounts Payable requires two posting references in the general journal.