Question Details

A credit memorandum is used as documentation 



1. A credit memorandum is prepared when
a. an employee does a good job.
b. goods are sold on credit.
c. goods that were sold on credit are returned.
d. customers refuse to pay their accounts.
2. The Sales Returns and Allowances account is classified as a(n)
a. asset account.
b. contra asset account.
c. expense account.
d. contra revenue account.
3. A credit memorandum is used as documentation for a journal entry that requires a debit to
a. Sales and a credit to Cash.
b. Sales Returns and Allowances and a credit to Accounts Receivable.
c. Accounts Receivable and a credit to a contra-revenue account.
d. Cash and a credit to Sales Returns and Allowances.
4. If a customer agrees to retain merchandise that is defective because the seller is willing to
reduce the selling price, this transaction is known as a sales
a. discount.
b. return.
c. contra asset.
d. allowance.
5. A credit sale of $900 is made on July 15, terms 2/10, n/30, on which a return of $50 is
granted on July 18. What amount is received as payment in full on July 24?
a. $900
b. $833
c. $850
d $882



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