Question : 11) Spice Company completed the following transactions: May 10Prepared voucher #301 : 1177315

11) Spice Company completed the following transactions:

May 10Prepared voucher #301 for purchase of merchandise for $3,600 from Sugar Company

12Returned $500 of the merchandise purchased from Sugar because of poor quality.

Cancelled voucher #301 and replaced it with voucher #305.

Required: Prepare journal entries to record the above transactions. Assume Spice uses the gross approach method for recording purchases. Omit explanations.

12) Any change in an already recorded voucher dictates the ________ of that voucher.

23.3   Learning Objective 23-3

1) What is the internal control advantage of using the net method of accounting for merchandise purchases?

A) It highlights the inefficiency of losing purchase discounts.

B) It guarantees that all purchase discounts will be taken.

C) It automatically increases a firm’s cash balance.

D) It results in a higher quality of inventory on hand for customers.

2) The Discount Lost account is used when the:

A) gross method is used and the discount is not taken.

B) gross method is used and the discount is taken.

C) net method is used and the discount is not taken.

D) net method is used and the discount is taken.

3) If the net approach method is applied, the purchase of $2,000 of merchandise with terms 2/10, n/30 is recorded by:

A) debit Cash $2,000; credit Accounts Payable $2,000.

B) debit Accounts Payable $2,000; credit Purchases $2,000.

C) debit Purchases $2,000; credit Accounts Payable $2,000.

D) debit Purchases $1,960; credit Vouchers Payable $1,960.

4) If the net approach method is applied, the purchase of $6,500 of merchandise with terms 3/20, n/60 is recorded by:

A) debit Cash $6,500; credit Accounts Payable $6,500.

B) debit Accounts Payable $6,500; credit Purchases $6,500.

C) debit Purchases $6,305; credit Accounts Payable $6,305.

D) debit Purchases $6,305; credit Vouchers Payable $6,305.

5) Toy Trains Company bought $5,000 of merchandise, terms 2/10, n/30. The journal entry to record the transaction under the net approach method would be to:

A) debit Purchases $4,900; credit Accounts Payable $4,900.

B) debit Purchases $5,000; credit Vouchers Payable $5,000.

C) debit Purchases $5,000; credit Vouchers Payable $4,900; credit Discounts Lost $100.

D) debit Purchases $4,900; credit Vouchers Payable $4,900.

6) Grant’s Hardware bought $7,500 of merchandise, terms 3/10, n/30. The journal entry to record the transaction under the net approach method would be to:

A) debit Purchases $7,275; credit Accounts Payable $7,275.

B) debit Purchases $7,275; credit Vouchers Payable $7,275.

C) debit Purchases $7,500; credit Vouchers Payable $7,275; credit Discounts Lost $225.

D) debit Purchases $7,500; credit Cash $7,500.

7) Laird Corporation bought $2,000 of merchandise from Woods Corporation, terms 2/10, n/30. The journal entry to record the payment under the net approach method after the discount period would be to:

A) debit Vouchers Payable $2,000; credit Cash $2,000.

B) debit Vouchers Payable $2,000; credit Discounts Lost $40; credit Cash $1,960.

C) debit Vouchers Payable $1,960; credit Cash $1,960.

D) debit Vouchers Payable $1,960; debit Discounts Lost $40; credit Cash $2,000.