Study Perfect Your Score Score Guide - s3. · PDF fileThe amount added to the cost of merchandise to establish the selling price. (p. ... the price of each item, and the total amount
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Analyzing Transactions Recorded in Special Journals 24 Pts.Total 70 Pts.
StudyGuide
9Part One—Identifying Accounting TermsDirections: Select the one term in Column I that best fits each definition in ColumnII. Print the letter identifying your choice in the Answers column.
B. cash discountC. cash payments journalD. contra account
E. corporation
F. cost of merchandise
G. debit memorandum
H. list price
I. markup
J. purchase invoice
K. purchase on account
L. purchases allowanceM. purchases discount
N. purchases returnO. share of stock
P. stockholder
Q. terms of sale
R. trade discount
S. vendor
Column II
1. An organization with the legal rights of a person andwhich many persons may own. (p. 234)
2. Each unit of ownership in a corporation. (p. 234)3. Total shares of ownership in a corporation. (p. 234)4. An owner of one or more shares of a corporation. (p. 234)5. The price a business pays for goods it purchases to
sell. (p. 236)6. The amount added to the cost of merchandise to
establish the selling price. (p. 236)7. A business from which merchandise is purchased or
supplies or other assets are bought. (p. 236)8. A transaction in which the merchandise purchased is
to be paid for later. (p. 236)9. An invoice used as a source document for recording a
purchase on account transaction. (p. 238)10. An agreement between a buyer and a seller about
payment for merchandise. (p. 238)11. A special journal used to record only cash payment
transactions. (p. 242)12. A deduction that a vendor allows on the invoice
amount to encourage prompt payment. (p. 242)13. A cash discount on purchases taken by a customer. (p. 242)14. The retail price listed in a catalog or on an Internet
site. (p. 244)15. A reduction in the list price granted to customers. (p. 244)16. An account that reduces a related account on a
financial statement. (p. 245)17. Credit allowed for the purchase price of returned
merchandise, resulting in a decrease in the customer’saccounts payable. (p. 256)
18. Credit allowed for part of the purchase price ofmerchandise that is not returned, resulting in adecrease in the customer’s accounts payable. (p. 256)
19. A form prepared by the customer showing the pricededuction taken by the customer for returns andallowances. (p. 256)
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190 • Working Papers TE CENTURY 21 ACCOUNTING, 9TH EDITION
Part Two—Analyzing Accounting Concepts and PracticesDirections: Place a T for True or an F for False in the Answers column to show whether each of thefollowing statements is true or false.
Answers
1. T2. F3. T
4. T
5. T6. T
7. T8. F
9. F
10. T
11. F12. T13. T
14. T15. F
16. F17. T
18. F19. T20. T
21. F22. F23. T
24. T25. T
26. F27. T
1. Unlike a proprietorship, a corporation exists independent of its owners. (p. 234)2. A corporation can incur liabilities but cannot own property. (p. 234)3. As in proprietorships, information in a corporation's accounting system is kept separate
from the personal records of the owners, and this accounting concept application is called aBusiness Entity. (p. 234)
4. The selling price of merchandise must be greater than the cost of merchandise for abusiness to make a profit. (p. 236)
5. The cost account Purchases is used only to record the value of merchandise purchased. (p. 236)6. When purchases are recorded at their cost, including any related shipping costs and taxes,
the Historical Cost accounting concept is being applied. (p. 236)7. Recording entries in a journal with special amount columns saves time. (p. 237)8. All purchase transactions, including purchases made on account and purchases made for
cash, are recorded in the purchases journal. (p. 237)9. The source document for recording a purchase on account transaction is a memorandum
describing the merchandise purchased. (p. 238)10. By listing the quantity, the description, the price of each item, and the total amount
purchased, the Objective Evidence concept is applied. (p. 238)11. A purchase invoice usually lists only the total cost of the merchandise. (p. 238)12. A purchase on account transaction increases the amount owed to a vendor. (p. 239)13. A cash payments journal includes a special amount column for the cash account and the
accounts payable account. (p. 242)14. The source document for most cash payments is the check issued. (p. 242)15. When supplies are purchased for use in the business, the amount is recorded in the
purchases account. (p. 243)16. A special journal entry is made to show the amount of a trade discount. (p. 244)17. The terms of sale 2/15, n/30 mean that 2% of the invoice amount may be deducted if paid
within 15 days of the invoice date or the total invoice amount must be paid within 30 days.(p. 245)
18. Purchase discounts are recorded in the general journal. (p. 245)19. The contra account Purchases Discount has a normal credit balance. (p. 245)20. The custodian prepares a petty cash report when the petty cash fund is to be replenished.
(p. 248)21. The petty cash account Cash Short and Over is a permanent account. (p. 249)22. A journal is proved and ruled only at the end of a fiscal period. (p. 250)23. To begin a new journal page, the totals from the previous journal page are carried forward
to the next journal page. (p. 251)24. Buying supplies on account is recorded in the general journal. (p. 254)25. When supplies are purchased on account, the Store Supplies account balance increases and
the Accounts Payable account balance increases. (p. 255)26. The source document for a purchases return is a check. (p. 256)27. The normal account balance of Purchases Returns and Allowances is a credit. (p. 257)
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Part Three—Analyzing Transactions Recorded inSpecial JournalsDirections: In Answers Column l, print the abbreviation for the journal inwhich each transaction is to be recorded. In Answers Columns 2 and 3, printthe letters identifying the accounts to be debited and credited for eachtransaction.
1–2–3. Purchased merchandise on account from WixomSports. (p. 239)
4–5–6. Paid cash for rent. (p. 243)
7–8–9. Purchased merchandise for cash. (p. 244)
10–11–12. Paid cash on account to Wixom Sports, lesspurchases discount. (p. 245)
13–14–15. Paid cash on account to Tri-County Suppliers. (p. 246)
16–17–18. Paid cash to replenish the petty cash fund:supplies, miscellaneous, cash over. (p. 249)
19–20–21. Bought supplies on account from Yukon Outfitters.(p. 255)
22–23–24. Returned merchandise to Tri-County Suppliers. (p. 257)
Answers
Journal Debit Credit
1. PJ 2. F 3. A, L
4. CPJ 5. I 6. B
7. CPJ 8. F 9. B
10. CPJ 11. A, L 12. B, G
13. CPJ 14. A, K 15. B
16. CPJ 17. D, J 18. B, C
19. GJ 20. J 21. A, M
22. GJ 23. A, K 24. H
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192 • Working Papers TE CENTURY 21 ACCOUNTING, 9TH EDITION
Skimming and Careful ReadingWe must learn to use different techniques as we read. Sometimes we need to skim material very quickly,touching only the high points. At other times we need to read slowly and carefully, concentrating on everyword.
SkimmingSkimming helps you gain a general understanding of what is contained in material without slow and carefulreading. You may wish to skim a magazine article to determine if it contains information you want to readcarefully later.
You can use skimming to preview an assignment before you read for details. You should first read the ti-tle and the introduction quickly. You should then read the main headings and glance through the para-graphs. By skimming first, you will know what is included before you become involved in the details.
If you own the book, you may wish to use a highlighter sparingly as you skim. This will help call your attention to certain parts of a selection later. If you highlight too much, it will be of little help to you.
You can also use skimming to review material that you have studied previously. Before an exam, forexample, you may want to read quickly through the material to be sure that you have not forgotten anyimportant points.
Careful ReadingMany times you will be responsible for every detail in a reading assignment. You may have to remembernames, dates, and facts that are of great importance. Before you read for details, you should skim thematerial first to gain an overview. Then you should read it slowly and carefully.
As you read carefully, you should ask yourself what is included in each paragraph. If you can summarizeeach paragraph as you read, you will have a good understanding. Then you should determine if you can remember names, dates, and other details. If you cannot, you should read the material again, concentratingon the details while keeping the overall picture in mind.
ConclusionSkimming and careful reading are techniques that will be extremely useful to you in the future. You shouldknow which technique to use and be sure to use it properly. Skimming will give you an overall view of thematerial. Careful reading will ensure that you know the details.
StudySkills
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Name Date Class
WORK TOGETHER, p. 2419-1
Journalizing purchases using a purchases journal
Chapter 9 Journalizing Purchases and Cash Payments • 193
PURCHASES JOURNAL PAGE 10
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DATE ACCOUNT CREDITED PURCHASES DR.ACCTS. PAY. CR.
Oct.20 – –
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American Tools
Harris Manufacturing, Inc.
Keasler Supply
Total
PURCH.NO.
POST.REF.
1 2 3 0 00
4 8 0 00
7 8 0 00
2 4 9 0 00
116
117
118
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