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Which of the following best describes credit sales?
a. Cash sales to customers that are new to the company.
b. Sales to customers using credit cards.
c. Sales to customers on account.
d. Sales with a high risk that the customer will return the product.
56. Credits sales are recorded as:
a. Debit Cash, credit Unearned Revenue.
b. Debit Service Revenue, credit Accounts Receivable.
c. Debit Cash, credit Service Revenue.
d. Debit Accounts Receivable, credit Service Revenue.
57. A company provides services on account. Indicate how this transaction would affect the following five financial statement items:
Stockholders’
Assets Liabilities Equity Revenues Expenses
a.Increase Decrease Increase Decrease No effect
b.Increase No effect Increase Increase Decrease
c.Increase No effect Increase Increase No effect
d.No effectNo effectNo effectNo effectNo effect
58. Lewis Inc. had the following information taken from various accounts for 2015:
|
Sales discounts |
$41,000 |
|
Unearned revenues |
$32,000 |
|
Total sales |
$459,000 |
|
Purchase discounts |
$15,000 |
|
Sales allowances |
$35,000 |
|
Accounts receivable |
$205,000 |
What was Lewis Inc.’s net revenues in 2015?
a. $368,000.
b. $434,000.
c. $383,000.
d. $437,000.
59. On July 8, Ray Inc. sold 100 printers to Office Rental Company at $600 each and offered a 2% discount for payment within 10 days. On July 15, Office Rental Company paid the full amount in cash. What should Ray Inc. record on July 15?
a. Cash60,000
Accounts Receivable60,000
b. Cash58,800
Accounts Receivable58,800
c. Cash58,800
Sales Discounts 1,200
Accounts Receivable60,000
d. Cash60,000
Sales Discounts 1,200
Sales Revenue58,800
60. Eric Company has the following information:
|
Total revenues |
$860,000 |
|
Sales returns and allowances |
$50,000 |
|
Sales discounts |
$30,000 |
|
Ending inventory |
$100,000 |
What is the amount of net revenues for Eric Company?
a. $330,000.
b. $230,000.
c. $680,000.
d. $780,000.
61. On March 17, Jackal Lumber sold building materials to Fredo Limited for $15,000 with terms of 3/10, net 20. What amount did Jackal record as revenue on March 25 when Fredo paid for the building materials?
a. $15,000.
b. $14,550.
c. $15,450.
d. $0.
62. Garber Plumbers offers a 20% trade discount when providing $2,000 or more of plumbing services to its customers. In March 2015, Garber provided $4,000 of plumbing services to Red Oak, Inc. and $1,500 of services to Cyril, Inc. Each of these customers was granted credit terms of 2/10, net 30. If both customers paid for the plumbing services within the discount period, what was the net revenues figure for these two transactions?
a. $5,500.
b. $4,312.
c. $4,486.
d. $4,606.
63. Boynton Jewelers reported the following amounts at the end of the year: total sales = $550,000; sales discounts = $12,000; sales returns = $44,000; sales allowances = $17,000. What was the company’s net revenues for the year?
a. $489,000.
b. $485,000.
c. $477,000.
d. $499,000.
64. A company collects a customer’s account within the discount period. Indicate how this transaction would affect the following five financial statement items:
Stockholders’
AssetsLiabilities Equity Revenues Expenses
a.Decrease No effect Decrease Decrease No effect
b.Increase No effect Increase Increase Decrease
c.Increase No effect Increase Increase No effect
d.No effect No effect No effect No effect No effect
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