Quiz 7

On June 1, 2018, Dr. Quack Quack sold merchandise with a list price of P5,000 to Dr. Kwek Kwek on account. Dr. Quack Quack allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB shipping point. Dr. Quack Quack prepaid P200 of delivery costs for Dr. Kwek Kwek as an accommodation. On June 12, 2018, Dr. Quack Quack received from Dr. Kwek Kwek a remittance in full payment amounting to

• P2,744

• P3,140

• P2,944

• P2,940

When the seller advances the transporatation costs and the terms of sale are FOB shipping point, the seller records the payment of the transportation cost by debiting

• Sales

• Transportation in

• Accounts payable

• Accounts receivable

The periodic inventory system is used most commonly by companies that sell

• high-priced, high-volume merchandise

• high-priced, low-volume merchandise

• low-priced, high-volume merchandise

• low-priced, low-volume merchandise

The collection of a P4,000 account within the 2% discount period would result in a

• debit to Sales Discount for P80

• debit to Accounts Receivable for P3,920

• credit to Cash for P3,920

• credit to Accounts Receivable for P3,920

Buyer should prepare this document upon payment.

• Receipt

• Bill

• Invoice

• Voucher

In the income statement, operating expenses are classified as selling expenses, administrative expenses and other operating expenses.

• FALSE

• TRUE

The following information applied to Meemaw Perfume Business, for 2018 - Merchandise purchased for resale (P400,000), Freight-in (P10,000), Freight-out (P5,000), Purchase returns (P2,000). Meemaw 2018 inventoriable cost was

• P404,000

• P413,000

• P400,000

• P408,000

Which of the following journal entry is correct for the transactions of goods returned by a customer?

• Debit Purchases Returns ; Credit Trade Payables

• Debit Purchases Returns ; Credit Trade Receivables

• Debit Sales Returns ; Credit Trade Payables

• Debit Sales Returns ; Credit Trade Receivables

Cost of goods sold is a major expense of a merchandising business.

• FALSE

• TRUE

The Sales Returns and Allowances account has a normal debit balance.

• FALSE

• TRUE