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Accounting Entries for Goods Returns and Sales Discounts
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Accounting Entries for Goods Returns and Sales Discounts

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Questions and Answers

What accounts are affected when recording returned goods from customers at their sales price?

  • Prepaid expenses, Depreciation
  • Inventory, COGS
  • Sales returns and allowances, Cash or Accounts receivable (correct)
  • Sales discounts, Inventory
  • What is the purpose of the second entry when customers return goods?

  • Increase the owner's equity
  • Close temporary accounts
  • Update the Inventory account (correct)
  • Record Sales discounts
  • What is recorded when customers pay early to take advantage of terms offered?

  • COGS
  • Prepaid expenses
  • Sales discount (correct)
  • Sales returns and allowances
  • What is the main purpose of closing entries at the end of a period?

    <p>To zero out temporary accounts</p> Signup and view all the answers

    Which financial statement provides users with more information for decision-making?

    <p>Multi-step income statement</p> Signup and view all the answers

    What differentiates the preparation of the balance sheet for merchandising companies from that of service companies?

    <p>Addition of the asset account, Inventory</p> Signup and view all the answers

    What is the net sales revenue for October 2012?

    <p>$35,280</p> Signup and view all the answers

    What is the gross profit for October 2012?

    <p>$13,680</p> Signup and view all the answers

    Why might the physical count of inventory differ from the book balance?

    <p>Inventory shrinkage or theft</p> Signup and view all the answers

    What account should be closed first in the closing entries process?

    <p>Revenues</p> Signup and view all the answers

    If the unadjusted balance of the Inventory account was $63,000 and the physical count was $61,900, what is the adjusting entry?

    <p>Debit Cost of Goods Sold $1,100; Credit Inventory $1,100</p> Signup and view all the answers

    What happens to the Sales Discount in the calculation of Net Sales Revenue?

    <p>It is deducted from Gross Sales Revenue</p> Signup and view all the answers

    What was the total amount of Sales Revenue reported by Carolina Communications?

    <p>$696,000</p> Signup and view all the answers

    What is the total amount of Rockwell's Capital?

    <p>$208,000</p> Signup and view all the answers

    How much was the Accounts Payable balance reported by Carolina Communications?

    <p>$17,000</p> Signup and view all the answers

    What was the total amount of Inventory mentioned in the financial statements?

    <p>$261,000</p> Signup and view all the answers

    Which account represents a Sales Discount in the financial statements?

    <p>$9,000</p> Signup and view all the answers

    What was the total amount of Rent Expense reported by Carolina Communications?

    <p>$21,000</p> Signup and view all the answers

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