131. When goods are shipped FOB destination and the seller pays the freight charges, the buyer
A. journalizes a reduction for the cost of the merchandise.
B. journalizes a reimbursement to the seller.
C. does not take a discount.
D. makes no journal entry for the freight.
132. Anthony Company sold Madison Company merchandise on account FOB shipping point, 2/10, net 30, for $20,000. Anthony prepaid the $300 shipping charge. Which of the following entries does Anthony make to record this sale?
A. Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000
B. Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000,
and
Accounts Receivable-Madison, debit $300; Cash, credit $300
C. Accounts Receivable-Madison, debit $20,500; Sales, credit $20,500
D. Accounts Receivable-Madison, debit $20,000; Sales, credit $20,000,
and
Freight Out, debit $300; Cash, credit $300
133. Emma Co. sold Isabella Co. merchandise on account FOB shipping point, 2/10, net 30, for $25,000. Emma Co. prepaid the $500 shipping charge. Using the perpetual inventory method, which of the following entries will Isabella Co. make if Isabella Co. pays within the discount period?
A. Accounts Payable-Emma Co., debit $25,000; Freight In, credit $500; Cash, credit $24,500
B. Accounts Payable-Emma Co., debit $25,500; Merchandise Inventory, credit $500; Cash, credit $25,000
C. Accounts Payable-Emma Co., debit $25,000; Freight In, debit $500; Cash, credit $25,500
D. Accounts Payable-Emma Co., debit $25,500; Merchandise Inventory, debit $500; Cash, credit $26,000
134. A chart of accounts for a merchandising business
A. usually is the same as the chart of accounts for a service business
B. usually requires more accounts than does the chart of accounts for a service business
C. usually is standardized by the FASB for all merchandising businesses
D. always uses a three-digit numbering system
135. Cumberland Co. sells $1,200 of inventory to Hancock Co.for cash. Cumberland paid $850 for the merchandise. Under a perpetual inventory system, which of the following journal entry(ies) would be recorded?
A. Cash 1,200 Dr, Merchandise Inventory 850 Cr
B. Cash 1,200 Dr, Sales 1,200 Cr, Cost of Merchandise Sold 850 Dr, Merchandise Inventory 850 Cr.
C. Cash 1,200 Dr, Sales 1,200 Cr
D. Accounts Receivable 1,200 Dr, Sales 1,200 Cr, Cost of Merchandise Sold 850 Dr, Merchandise Inventory 850 Cr.
136. Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. What is the amount of the discount and up to what date must the invoice be paid in order for the buyer to take advantage of the discount?
A. $80, April 30
B. $192, April 25
C. $96, April 30
D. $96, April 25
137. Isaac Co. sells merchandise on credit to Sonar Co in the amount of $9,600. The invoice is dated on April 15 with terms of 1/15, net 45. If Sonar Co. chooses not to take the discount, by when should the payment be made?
A. April 30
B. May 30
C. May 15
D. April 25
138. Discounts taken by a buyer because of early payment are recorded on the seller’s accounting records as
A. Purchases discount
B. Sales discount
C. Trade discount
D. Early payment discount
139. Taking advantage of a 2/10, n/30 purchases discount is equal to a savings yearly rate of approximately
A. 2%
B. 24%
C. 20%
D. 36%
140. Use the following information to answer questions 65-70.
1.
|
$7,000 of merchandise inventory was ordered on September 2, 2009
|
2.
|
$3,000 of this merchandise was received on September 5, 2009
|
3.
|
On September 6, 2009, an invoice dated September 4, 2009, with terms of 3/10, net 30 for $3,250 which included a $250 prepaid freight cost, was received.
|
4.
|
On September 10, 2009, $800 of the merchandise was returned to the seller.
|
|
|
Based on the above information, what would be recorded as purchases discount if the invoice is paid within the discount period?
A. $73.50
B. $90.00
C. $210.00
D. $66.00