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SUA Midterm
For making provisions for Bad Debt the journal entry is: Dr. Allowance for Doubtful Accounts Cr: Accounts Receivable - correct answer False, that is to write off an account as uncollectible. Freight-In Balance in GL is required for calculating COGS - correct answer True Bad Debt Expense is calculated after multiplying a certain percentage by Gross Sales - correct answer False, it is by CREDIT sales You have done the year ending adjustment entry in the General Journal to adjust inventory and record COGS. After making the journal entry in the General Journal, you post it to the GL accounts. Subsequently, which of the following accounts will have a balance of Zero, in the GL. A. Purchases and Returns Allowances B. Purchases discounts taken C. Freight-In D. All of the above - correct answer D, because these all have to adjust back into purchases in order to change into adjusted inventory The adjustment entry for Interest Expense is Dr. Interest payable Cr. Interest Expense - correct answer False, it is the opposite A retailer purchased 10 laptops for 800. The retailer sold these 10 laptops for $1000. The Cost of Goods sold is then $1000. - correct answer False, COGS uses the cost not the sales price
For Bad debt expense, you need information from GL account balance of Sales, Sales Returns and Allowances, and Sales Discounts. - correct answer True The adjustment for depreciation expenses is made in the General Ledger, and then posted to the General Journal. - correct answer False, made in General Journal and moved to General Ledger You calculate the depreciation expense from the Fixed Assets Trial Balance - correct answer False, you can find it through the Fixed Asset Subsidiary Ledger The entry for making depreciation for the year, is : Dr Depreciation Expense Cr. Accumulated Depreciation - correct answer True The receiving report is also prepared when you , get returned goods from a customer - correct answer True Jim Adams in Warren Sports Supply, authorizes the request to return? - correct answer False, Ray Kramer does Bill of Lading is prepared by the Trucking company (transporter) and sent to Warren Sports Supply for authorization - correct answer False, prepared by the Vendor (Waren Sports Supply) After a billing a customer, including the recording of the receivable, there are three ways the balance in accounts receivable can be eliminated or reduced:---- collection of cash, sales returns and allowances, or write-off as uncollectible - correct answer True The bank deposit slip is sent to the bank every day. - correct answer True For your project, the sales and cash flowcharts are located in the reference book. - correct answer False, they are located in the instruction, flowcharts, and ledger book
Purchase Order is PREPARED by Customer Vendor Both Neither - correct answer Customer How many documents are absolutely necessary for Jim Adams, before he can make make an entry for inventory purchase in the purchase journal? - correct answer 3 For purchases of inventory on account, once you have made the journal entry in the purchase journal, you post same day to Accounts Payable subsidiary ledger - correct answer True Ray Kramer mentions on the invoice that it has been paid via check #. Why is this important? - correct answer Good internal controls and avoids duplicate payment You recognize the purchase, on the date on which the goods were received, irrespective of the fact that the invoice was received later. - correct answer True For payment on account for inventory purchase, Ray Kramer needs all three documents - Purchase Order, Invoice, and Receiving Report before signing on the check prepared by Jim Adams. - correct answer True For cash purchases, you need 3 documents before you make a journal entry in cash disbursement journal. They are Receiving Report, Invoice, and copy of the Purchase Order. - correct answer False, you can recognize a journal entry in the CD journal when you receive payment Who receives the goods? - correct answer Nancy Ford In the cash disbursement journal, you are debiting the cash & purchases discounts. - correct answer False, you are crediting cash and purchase discounts
Who authorizes to disburse the checks? - correct answer Ray Kramer Every time, you make a check to make a payment to the vendor, Jim Adams A. writes on the back of the check, " For Deposit only, Warren Sports Supply" B. Restrictively endorse it C. Both of the above D. None of the above - correct answer D. None of these On 24th Dec, Warren Sports Supply purchases $1000 of goods from Velocity Sporting goods. All required quantity mentioned were received in good condition. Warren Sports decides to make a full payment on 26th Dec. How much will be the amount on the check. Remember the terms are based on your instruction booklet. - correct answer $980, Velocity gives Waren 2/10, net 30 You are not getting a discount, when you are purchasing from Chicago Office Supplies in your project - correct answer True, payment due on receipt of invoice, we usually pay 5 days later
