131. The following information is available to reconcile Sleepy Time Bedding’s book balance of cash with its bank statement cash balance as of July 31:
a.
On July 31, the company’s Cash account has a $25,862 debit balance, but its July bank statement shows a $28,177 cash balance.
b.
Check No. 1531 for $1,520 and Check No. 1540 for $752 were outstanding on the June 30 bank reconciliation. Check No. 1540 is listed with the July canceled checks, but Check No. 1531 is not. Also, Check No. 1565 for $536 and Check No. 1569 for $2,288, both written in July, are not among the canceled checks on the July 31 statement.
c.
In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 1556 for July rent was correctly written and drawn for $1,240 but was erroneously entered in the accounting records as $1,230.
d.
A credit memorandum enclosed with the July bank statement indicates the bank collected $9,500 cash on a noninterest-bearing note for Sleepy Time Bedding, deducted a $48 collection fee, and credited the remainder to its account. Sleepy Time Bedding had not recorded this event before receiving the statement.
e.
A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Sleepy Time Bedding has not yet recorded this check as NSF.
f.
Enclosed with the July statement is a $14 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received.
g.
Sleepy Time Bedding July 31 daily cash receipts of $10,652 were placed in the bank’s night depository on that date but do not appear on the July 31 bank statement.
What is the appropriate journal entry to record the collection made by the bank?
A. Debit to cash $9,500 credit to accounts receivable $9,500.
B. Credit to accounts receivable $9,500 credit to cash $9,500.
C. Debit to cash $9,452 debit to collection expense $48 credit accounts receivable $9,500.
D. Debit to cash $9,452 debit to collection expense $48 credit notes receivable $9,500.
E. No adjusting entry is necessary.
132. What is the net method of recording purchases?
A. A purchase is originally recorded at its full amount with any cash discount taken recorded as a reduction to inventory at a later date.
B. A purchase is originally recorded at its full amount less any available cash discount.
C. A purchase is originally recorded at its full amount plus any available cash discount.
D. A purchase is originally recorded at its full amount with any cash discount taken recorded as an increase to inventory at a later date.
E. A purchase is originally recorded to a purchase discounts lost account with any cash discount taken recorded as a reduction to inventory at a later date.
133. The Discounts Lost account:
A. Is used with the gross method of recording purchases to highlight the value of purchase discounts taken.
B. Is used with the gross method of recording purchases to highlight the value of purchase discounts available but not taken.
C. Is used to note situations where the accounting department has lost or misplaced paperwork relating to inventory purchases.
D. Is used with the net method of recording purchases to highlight the value of purchase discounts taken.
E. Is used with the net method of recording purchases to highlight the value of purchase discounts available but not taken.
134. A company purchases merchandise on November 2 at a $2,400 invoice price (terms 3/10, n/30) and then pays all amounts owed on November 12. Using perpetual inventory and net purchases methods, what are the proper entries to record these two transactions?
A.
Nov. 2
Merchandise Inventory
2,400
Accounts Payable
2,400
nventoryDiscounts Lostecord these two transactions.thod, what are the proper entries to record the pury purchases11111111111111
Nov. 11
Accounts Payable
2,400
Cash
2,400
B.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Cash
2,328
C.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
D.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Inventory
72
Cash
2,400
E.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
135. A company purchases merchandise on November 2 at a $2,400 invoice price (terms 3/10, n/30) and then pays all amounts owed on December 2. Using perpetual inventory and net purchases methods, what are the proper entries to record these two transactions?
A.
Nov. 2
Merchandise Inventory
2,400
Accounts Payable
2,400
nventoryDiscounts Lostecord these two transactions.thod, what are the proper entries to record the pury purchases11111111111111
Dec. 2
Accounts Payable
2,400
Cash
2,400
B.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Cash
2,328
C.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
D.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Inventory
72
Cash
2,400
E.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
136. A company purchases merchandise on November 2 at a $2,400 invoice price (terms 3/10, n/30) and then pays all amounts owed on November 12. Using periodic inventory and net purchases methods, what are the proper entries to record these two transactions?
A.
Nov. 2
Merchandise Inventory
2,400
Accounts Payable
2,400
nventoryDiscounts Lostecord these two transactions.thod, what are the proper entries to record the pury purchases11111111111111
Nov. 11
Accounts Payable
2,400
Cash
2,400
B.
Nov. 2
Purchases
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Cash
2,328
C.
Nov. 2
Purchases
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
D.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Inventory
72
Cash
2,400
E.
Nov. 2
Purchases
2,328
Accounts Payable
2,328
Nov. 11
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
137. A company purchases merchandise on November 2 at a $2,400 invoice price (terms 3/10, n/30) and then pays all amounts owed on December 2. Using periodic inventory and net purchases methods, what are the proper entries to record these two transactions?
A.
Nov. 2
Merchandise Inventory
2,400
Accounts Payable
2,400
nventoryDiscounts Lostecord these two transactions.thod, what are the proper entries to record the pury purchases11111111111111
Dec. 2
Accounts Payable
2,400
Cash
2,400
B.
Nov. 2
Purchases
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Cash
2,328
C.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
D.
Nov. 2
Merchandise Inventory
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Inventory
72
Cash
2,400
E.
Nov. 2
Purchases
2,328
Accounts Payable
2,328
Dec. 2
Accounts Payable
2,328
Purchase Discounts Lost
72
Cash
2,400
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