Question Details

Feine Company sells merchandise on account 



1. A sales discount does not
a. provide the purchaser with a cash saving.
b. reduce the amount of cash received from a credit sale.
c. increase a contra-revenue account.
d. increase an operating expense account.
2. Company A sells $500 of merchandise on account to Company B with credit terms of
2/10, n/30. If Company B remits a check taking advantage of the discount offered, what is
the amount of Company B's check?
a. $350
b. $490
c. $450
d. $400
3. Hale Company sells merchandise on account for $1,500 to Kear Company with credit
terms of 2/10, n/30. Kear Company returns $300 of merchandise that was damaged,
along with a check to settle the account within the discount period. What is the amount of
the check?
a. $1,470
b. $1,476
c. $1,200
d. $1,176
4. Feine Company sells merchandise on account for $2,000 to Tang Company with credit
terms of 2/10, n/30. Tang Company returns $300 of merchandise that was damaged,
along with a check to settle the account within the discount period. What entry does Feine
Company make upon receipt of the check?
a. Cash .................................................................................... 1,700
Accounts Receivable .................................................. 1,700
b. Cash .................................................................................... 1,666
Sales Returns and Allowances............................................ 334
Accounts Receivable .................................................. 2,000
c. Cash .................................................................................... 1,666
Sales Returns and Allowances............................................ 300
Sales Discounts................................................................... 34
Accounts Receivable .................................................. 2,000
d. Cash .................................................................................... 1,960
Sales Discounts................................................................... 40
Sales Returns and Allowances ................................... 300
Accounts Receivable .................................................. 1,700
5. Which of the following would not be classified as a contra account?
a. Sales
b. Sales Returns and Allowances
c. Accumulated Depreciation
d. Sales Discounts




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