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Exam 8: Accounting for Purchases and Accounts Payable

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Question 21

Multiple Choice

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If the perpetual inventory system is used to record the purchase and sale of goods, the account used to record shipping charges is the:

A) merchandise inventory account.
B) purchases account.
C) freight in account.
D) transportation in account.

E) All of the above
F) A) and B)

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Question 22

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If a business pays $1,100 on account to a creditor, the effect of the payment is a decrease to cash and a(n) :

A) decrease to Fees Income.
B) decrease to accounts payable.
C) increase to accounts receivable.
D) increase of capital.

E) A) and B)
F) C) and D)

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Question 23

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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. -Purchased merchandise with terms of net 30 days.

The journal entry to record the purchase on account of $900 of merchandise with freight of $65 prepaid by their supplier and added to the invoice is:

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

No amounts are posted from the purchases journal to the accounts payable subsidiary ledger during the month.

The Picture Perfect Camera Shop had the following transactions for the month of August 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 August 31. Aug. 1 Purchased cameras for $3,500 plus a freight charge of $160 from the Mason Company, Invoice 532, dated July 29, net payable in 60 days. 6 Purchased color film for $475 from Digital Company, Invoice 989, dated August 4, net payable in 30 days. 10 Purchased camera cases for $925 from Raven Company, Invoice 668, dated August 8; terms are 2/10, n/30. 15 Returned defective cameras to Mason Company and received Credit Memorandum 205 for $540. The cameras were originally purchased on Invoice 532 of July 29. 20 Purchased cameras for $3,575 plus freight of $90 from Braemer Cameras, Invoice 2093, dated August 18; terms are 1/10, n/60. 23 Received Credit Memorandum 597 for $60 from Raven Company. The amount is an allowance for slightly damaged but usable goods purchased on Invoice 668 dated August 8.

Read the description of the following transactions that are recorded during the accounting period for Drummond Consulting Services. The company uses a periodic inventory system. Determine the account to be debited and the account to be credited. A)Purchased merchandise with terms of 2/10, n/30. The supplier's invoice includes a freight charge. 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) Issued a check to a supplier as a payment on account

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. -Issued a check to a supplier as a payment on account.

At the end of February 2019 and before the purchases journal was posted, selected general ledger account balances for Volter Repair Services were as follows (each account had a normal balance): $\begin{array}{l|l}\text { Accounts Payable } &{\$ 10,000} \\\hline \text { Purchases } & 26,000 \\\hline \text { Freight In } & 300\end{array}$ The purchases journal had the following totals: Purchases, $31,200; Freight In, $2,850; Accounts Payable, $34,050. Calculate the ending balance of each of the three accounts after the posting from the purchases journal. Indicate whether each balance is a debit or credit.

Which of the following statements is correct?

For good internal control of purchases, businesses should do all of the following except:

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. -Issued a check to a supplier as a payment on account.

On November 30, 2019, the general ledger of Hinges and More Hardware, a retail store, showed the following balances: Purchases, $163,570; Freight In, $5,200; Purchases Returns and Allowances, $8,000. Determine the following: A)What was the delivered cost of purchases for November? B)What was the net delivered cost of purchases for November?

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. -Returned some damaged merchandise to a supplier and received a credit memorandum.

Which of the following accounts has a normal debit balance?

If the perpetual inventory system is used to record the purchase and sale of goods, the account used to record the return of merchandise is the:

In a firm that uses special journals, the purchase of merchandise for $2,800, payable in 30 days, plus a freight charge of $140 is recorded in the:

The amount of the purchases for a period is presented in:

Topix Music Store uses the perpetual inventory system and had the following transactions during the month of June. Record the transactions in the general journal on page 2. (Omit explanations.)June 4 Purchased $10,000 of goods on account from Music Supply Store, terms 2/10, n/30. June 8 Received a freight bill directly from the transportation company U.S.P. for $50 indicating payment due in 30 days. June 15 Sold goods originally costing $400, to M. Brown for $1,000 on credit. June 25 Received a $150 credit memorandum from Music Supply Store as an allowance due to damaged goods.