65. A company records a sales return from a credit customer. Indicate how this transaction would affect the following five financial statement items.
Stockholders’
Assets LiabilitiesEquity Revenues Expenses
a.Decrease No effect Decrease Decrease No effect
b.Increase No effect Increase Increase Decrease
c.Increase Increase Increase Increase No effect
d.No effect No effect No effect No effect No effect
66. Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. The price reduction is an example of a:
a. Sales revenue.
b. Sales discount.
c. Sales return.
d. Sales allowance.
67. Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. This is an example of a:
a. Sales revenue.
b. Sales discount.
c. Sales return.
d. Sales allowance.
68. A trade discount results in:
a. A contra revenue account being recorded.
b. A contra asset being recorded.
c. Customers delaying cash payment.
d. Revenue being recorded for the discounted price.
69. Barton Health Services provided care to a patient worth $1,200. Because the patient was over the age of 65, Barton granted the patient a 20% discount and the customer paid the correct amount in cash. How would Barton record the service transaction?
a. Cash 960
Service Revenue 960
b. Cash 960
Trade Discount 240
Service Revenue1,200
c. Cash1,200
Service Revenue1,200
d. Cash1,200
Trade Discount 240
Service Revenue 960
70. Gershwin Wallcovering Inc. shipped the wrong shade of paint to a customer. The customer agreed to keep the paint upon being offered a 15% price reduction. Gershwin would record this reduction by crediting Accounts Receivable and debiting:
a. Sales Revenue.
b. Sales Discounts.
c. Sales Returns.
d. Sales Allowances.
71. Tom's Textiles shipped the wrong material to a customer, who refused to accept the order. Upon receipt of the material, Tom's would credit Accounts Receivable and debit:
a. Sales Revenue.
b. Sales Discounts.
c. Sales Returns.
d. Sales Allowances.
72. When customers purchase products on account, Spitz Manufacturing offers them a 2% reduction in the amount owed if they pay within 10 days. This is an example of a:
a. Bad debt.
b. Sales discount.
c. Sales return.
d. Sales allowances.
73. On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. How would Flores record the sale on November 10?
a. Accounts Receivable7,840
Sales Revenue7,840
b. Accounts Receivable8,000
Sales Revenue8,000
c. Accounts Receivable7,840
Cash Discounts 160
Sales Revenue8,000
d. Accounts Receivable8,000
Cash Discounts 160
Sales Revenue7,840
74. On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on November 17. How would Flores record the collection of cash on November 17?
a. Cash7,840
Accounts Receivable7,840
b. Cash7,840
Sales Discounts 160
Accounts Receivable8,000
c. Cash7,840
Sales Revenue 160
Accounts Receivable8,000
d. Cash8,000
Accounts Receivable8,000