Book 2 - Chapter 19

Multiple Choice
1.	a
2.	c
3.	d
4.	d
5.	a
6.	c
7.	b Calculation: $12,250/.98 = $12,500.
8.	b Calculation: ($108,000 – $14,000) (1.07) = $100,580. Then, $100,580 + $14,000 = $114,580 total cash collected.
9.	a Calculation: ($20,580 – $1,960)/.98 = $19,000. Remove the part of the collection that does not relate to Sales—the shipping charges—and the remainder is 98% of the sales amount.
10.	b The credit memo would show a credit to Accounts Receivable of $2,000.
11.	b Sales returns and allowances reduce net sales. Shipping charges paid by the seller are either an expense or a receivable reimbursed by the buyer. Sales tax is a liability.
12.	c
13.	c A credit memo indicates a reduction in accounts receivable.
14.	a $8,000 × .75 × .85 × .98 = $4,998

Learning Goal 19

SOLUTIONS

Learning Goal 19: Explain How Sales Are Recorded and Reported

Home

Home || Book Publications || Professor’s Office || Student Info & Resources || Useful Links

Worthy & James Publishing is a provider of basic accounting books covering fundamental accounting principles, business accounting, and business math. Topics in financial accounting and business accounting covered include the balance sheet, the income statement, financial ratios, and bank reconciliation.