Question :
11) The company uses the periodic inventory system and the : 1171214
11) The company uses the periodic inventory system and the voucher system. If the net method is applied, the purchase of $7,000 of merchandise with terms 4/15, n/60 is recorded by:
A) debit Cash $7,000; credit Accounts Payable $7,000.
B) debit Accounts Payable $7,000; credit Purchases $7,000.
C) debit Purchases $6,720; credit Accounts Payable $6,720.
D) debit Purchases $6,720; credit Vouchers Payable $6,720.
12) Toy Trains Company bought $8,000 of merchandise, terms 2/10, n/30. The company uses the periodic inventory system and the voucher system. The journal entry to record the transaction under the net method would be to:
A) debit Purchases $7,840; credit Accounts Payable $7,840.
B) debit Purchases $8,000; credit Vouchers Payable $8,000.
C) debit Purchases $8,000; credit Vouchers Payable $7,840; credit Discounts Lost $160.
D) debit Purchases $7,840; credit Vouchers Payable $7,840.
13) Grant’s Hardware bought $7,500 of merchandise, terms 1/10, n/30. The journal entry to record the transaction under the net approach method would be to:
A) debit Purchases $7,425; credit Accounts Payable $7,425.
B) debit Purchases $7,425; credit Vouchers Payable $7,425.
C) debit Purchases $7,500; credit Vouchers Payable $7,425; credit Discounts Lost $75.
D) debit Purchases $7,500; credit Cash $7,500.
14) Laird Corporation bought $5,000 of merchandise from Woods Corporation, terms 2/10, n/30. The company uses the periodic inventory system and the voucher system. The journal entry to record the payment under the net method after the discount period would be to:
A) debit Vouchers Payable $5,000 credit Cash $5,000.
B) debit Vouchers Payable $5,000; credit Discounts Lost $100; credit Cash $4,900.
C) debit Vouchers Payable $4,900; credit Cash $4,900.
D) debit Vouchers Payable $4,900; debit Discounts Lost $100; credit Cash $5,000.
15) On May 1, Garcia Corporation bought $10,000 of merchandise from Morris Corporation, terms 4/10, n/30. Garcia paid the invoice on May 6. The company uses the periodic and voucher systems. The journal entry to record the payment under the net method would be to:
A) debit Vouchers Payable $10,000; credit Cash $10,000.
B) debit Vouchers Payable $10,000; credit Discounts Lost $400; credit Cash $9,600.
C) debit Vouchers Payable $9,600; credit Cash $9,600.
D) debit Vouchers Payable $9,600; debit Discounts Lost $400; credit Cash $10,000.
16) A cash discount of $24 taken under the net method is recorded in:
A) the check register.
B) the voucher register.
C) the general journal.
D) None of these answers is correct.
17) The primary difference between the gross method and the net method of recording invoices is:
A) when the invoice is paid.
B) when the discount is recognized.
C) the gross method is only used when there are no discounts available.
D) the net method does not use a voucher system.
18) Brooke’s Company purchased $5,000 of merchandise with terms of 5/10, n/60 and paid the invoice within the discount period. Brooke uses the periodic and voucher systems. If Brooke’s uses the net method of recording merchandise purchases, the $250 purchases discount is recorded in:
A) the voucher register.
B) the check register.
C) the general journal.
D) None of these answers is correct.
19) Brooke Company purchased $8,000 of merchandise with terms of 2/10, n/60 and paid the invoice within the discount period. The company uses the periodic inventory method and the voucher system. If Brooke’s uses the net method of recording merchandise purchases, the $160 purchases discount is:
A) recorded in the voucher register.
B) recorded in the check register.
C) recorded in the general journal.
D) not recorded unless the discount is lost after the discount date.
20) The entry to record payment of a voucher, for an invoice within the discount period, under the net method will include:
A) a debit to Purchase Discounts Lost.
B) a credit to Purchase Discounts.
C) a credit to Discounts Lost.
D) None of these is correct.
