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When merchandise is purchased on account under the perpetual inventory system, the journal

When merchandise is purchased on account under the perpetual inventory system, the journal entry is:

A) debit Purchases and credit Accounts Payable.

B) debit Accounts Payable and credit Inventory.

C) debit Inventory and credit Accounts Payable.

D) debit Accounts Payable and credit Purchases.

E) debit Purchases and credit Cash.

 

12) Casey Company purchases goods for resale from Tim Corporation.  The amount of the purchase is $12,500 with terms of 3/10, n/30.  Casey returns $500 of the goods.  Under the perpetual inventory method, the journal entry to record the return is:

A) debit Accounts Payable; credit Purchase Returns and Allowances.

B) debit Purchase Returns and Allowances; credit Accounts Payable.

C) debit Accounts Payable; credit Inventory.

D) debit Accounts Payable; credit Purchase Discounts.

E) debit Accounts Receivable; credit Inventory.

 

 

13) If damaged goods are received by the merchandiser and are kept with a reduction in price, the account to be credited for the reduction in price under a perpetual inventory system is:

A) Inventory.

B) Accounts Payable.

C) Purchases Discount.

D) Cash.

E) Sales Discounts.

 

 

14) A company pays an invoice early and takes 4% off of the original invoice price.  The account to be credited for this amount under a perpetual inventory system is:

A) Inventory.

B) Accounts Payable.

C) Purchases Discount.

D) Cash.

E) Purchases Returns.

 

15) Discounts allowed for customers who pay their invoices early:

A) reduce the cost of the purchased inventory.

B) increase the cost of the purchased inventory.

C) are called manufacturers' discounts.

D) are called allowances.

E) are called cash discounts.

 

 

16) An invoice states 5/15, n/60.  What does the 15 refer to?

 

17) A discount offered by a supplier as an inducement for prompt payment of an invoice is called a(n):

 

 

18) What would be the credit terms that allows a discount of 3% if payment is made within 15 days of the invoice; otherwise, the total amount of the invoice must be paid within 30 days from the date of the invoice?

Dec 26 2019 View more View Less

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