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Exam 8: Accounting for Purchases and Accounts Payable

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Question 31

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The abbreviation P1 in the Posting Reference column of an account indicates that the data was posted from page 1 of the cash payments journal.

A) True
B) False

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Question 32

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The Freight In account should have a(n)____________________ balance.

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Question 33

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After damaged goods are returned,the supplier issues a(n)____________________ memorandum.

Which of the following statements is correct?

In a firm that uses special journals,the purchase of merchandise for cash is recorded in the

Tune Tones Instrument Tuning Company owes Mandy Lynn's Music Studio $4,856 as of November 1.During November Tune Tones purchased merchandise from Mandy Lynn totaling $8,495 and made payments on account to Mandy Lynn in the amount of $7,250.The amount Tune Tones owes Mandy Lynn on November 30 is:

In a small firm,the creditor accounts are placed in ____________________ order in the accounts payable ledger.

An allowance received from a creditor is posted to the ____________________ column of the creditor's account.

The accounts payable ledger for Dora's Dollar Shop is shown below.Prepare a schedule of accounts payable as of March 31,2016.

The total of the balances in the individual creditor's accounts should agree with the balance of

The use of a purchases journal strengthens the audit trail.

Freight In and Purchases Returns and Allowances are deducted from Purchases to determine the net delivered cost of purchases.

Purchases of merchandise on credit should be recorded in

To show that the totals of the amount columns in the purchases journal were posted,the appropriate account numbers are written in parentheses below the totals.

The entry to record a return of merchandise purchased on credit includes a debit to the ____________________ account in the general ledger.

Bally Boutique uses a perpetual inventory system when recording its purchases and sales of inventory.The business sells $6,000 of goods to charge account customers and the goods originally cost Bally,$3000.The entry to record the sale would include:

The Purchases Returns and Allowances account has a normal debit balance.

Read the description of the following transactions that are recorded during the accounting period for Hughley Consulting Services.Determine the account to be debited and the account to be credited. A)Issued a check to a supplier as a payment on account. B)Purchased merchandise;the supplier's invoice,which includes a freight charge,has payment terms of 2/10,n/30. C)Returned some damaged merchandise to a supplier and received a credit memorandum. D)Received an allowance for some merchandise that was slightly damaged but can be sold at a reduced price;received a credit memorandum. E)Purchased merchandise with terms of net 30 days.

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

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