On May I. Sam Company sold $5,000 of inventory to Bob Company.The sale was made on account and Sam granted Bob credit terms of2/10. n/30. The inventory cost Sam Company $3,000. On May 3, Bobreturned $1,000 of the inventory to Sam. (The inventory returned byBob cost Sam $600.) On May 9, Bob paid Sam in full for the amountdue.
1. What journal entry will Sam record on May 3 if the perpetualinventory system is used?
A) debit Merchandise Inventory, $600; credit Cost of Goods Sold,$600.
B) debit Sales, $1,000; credit Accounts Receivable, $1,000.
C) debit Sales, $1,000; credit Cash, $1,000.
D) debit Sales Returns and Allowances, $1,000; credit AccountsReceivable, $1,000.
E) debit Sales Returns and Allowances, $1,000; credit Cash,$1,000.
2. What journal entry will Bob record on May 9 if the periodicinventory system is used?
A) debit Accounts Payable, $4,000; credit Cash, $4,000.
B) debit Accounts Payable, $5,000; credit Cash, $5,000.
C) debit Accounts Payable, $4,000; credit Merchandise Inventory,$80; credit Cash, $3,920.
D) debit Accounts Payable, $4,000; credit Purchase Discounts;$80, credit Cash, $3,920
E) debit Accounts Payable, $4,000; credit Purchase Returns andAllowances, $80; credit Cash, $3,920.
3. What journal entry will Bob record on May 9 if the perpetualinventory system is used?
A) debit Accounts Payable, $4,000; credit Cash, $4,000.
B) debit Accounts Payable, $5,000; credit Cash, $5,000.
C) debit Accounts Payable, $4,000; credit Merchandise Inventory,$80; credit Cash, $3,920.
D) debit Accounts Payable, $4,000; credit Purchase Discounts;$80, credit Cash, $3,920
E) debit Accounts Payable, $4,000; credit Purchase Returns andAllowances, $80; credit Cash, $3,920.
4. What journal entry will Sam record on May 9?
A) debit Cash, $4,000; credit Accounts Receivable; $4,000.
B) debit Cash, $5,000; credit Accounts Receivable, $5,000.
C) debit Cash, $3,920; debit Sales, $80; credit AccountsReceivable, $4,000.
D) debit Cash, $3,920; debit Sales Discounts, $80; creditAccounts Receivable, $4,000.
E) debit Cash, $3,920; debit Sales Returns and Allowances, $80;credit Accounts Receivable, $4,000.
Use the following information to answer the next 6questions:
The following selected information is taken from thebooks of the Rick Company
Cash | 2,500 | Sales | 15,000 |
Accounts receivable | 3,000 | Purchases returns and allowances | 400 |
Purchases | 9,000 | Purchases discounts | 300 |
Sales returns and allowances | 150 | Accounts Payable | 3,000 |
Sales discounts | 350 | Allowance for Doubtful Accounts | 400 |
Inventory, 1/1/2007 | 3,000 | Selling expense | 400 |
Inventory, 12/31/2007 | 2,000 | . Administrative expense | 600 |
Transportation - out | 300 | Bad Debt Expense | 200 |
Transportation- in | 200 | Rent expense | 1,000 |
Dividends | 1,500 | Insurance expense | 500 |
5. Net Sales for the period is:
6. Cost of net purchases for the period is:
7. Cost of Goods Available for Sale for the periodis:
8. Cost of Goods Sold for the period is:
9. Gross Profit for the period is:
10. Net Income for the period is:
