Q1

Azure Company buys merchandise worth $1,500 from a supplier, Beige Company, with shipping terms of FOB shipping point. The total of invoice is $1,570 and Beige Company paid the transportation cost of $70 to be reimbursed by Azure Company. Which of the following journal entries records the purchase of merchandise for Azure Company?

a.A debit to Purchases for $1,500 and a credit to Accounts Payable, Beige Company for $1,500

b.A debit to Purchases for $1,430 and a credit to Accounts Payable, Beige Company for $1,430

c.A debit to Purchases and Freight out for $1,430 and $70 respectively and a credit to Accounts Payable, Beige Company for $1,500

d.A debit to Purchases and Freight In for $1,500 and $70 respectively and a credit to Accounts Payable, Beige Company for $1,570

Q2

Which of the following statements is true of a purchases journal?

a.It simplifies the recording process of purchase transactions.

b.It is used to record all types of purchase transactions.

c.It shows all transactions with all creditors in the past five years.

d.It eliminates the requirement of posting purchase transactions in a ledger.

Q3

Which of the following is a true of a sales journal?

a.A posting in a ledger is not required once the transaction is recorded in the sales journal.

b.The Post. Ref. column in the ledger accounts is not required as the entry is not recorded in the general journal.

c.It ensures that no invoice is missed as they are clearly listed in number order.

d.It includes an entry for freight charges.