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A company records a sales return from a credit customer Indicate how this transaction would affect the following five financial statement items

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

Jan 27 2020 View more View Less

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