Test bank accounting 25th editon warren chapter 6 accounting for merchandising businesses

Chapter Accounting for Merchandising Businesses Student: _ One of the most important differences between a service business and a retail business is in what is sold True False In a merchandise business, sales minus operating expenses equals net income True False Cost of merchandise sold is the amount that the merchandising company pays for the merchandise it intends to sell True False Service businesses provide services for income, while a merchandising business sells merchandise True False In many retail businesses, inventory is the largest current asset True False Under a periodic inventory system, the merchandise on hand at the end of the year is determined by a physical count of the inventory True False In the periodic inventory system, purchases of merchandise for resale are debited to the Purchases account True False Under the periodic inventory system, the cost of merchandise sold is equal to the beginning merchandise inventory plus the cost of merchandise purchased plus the ending merchandise inventory True False In a perpetual inventory system, the Merchandise Inventory account is only used to reflect the beginning inventory True False 10 In a periodic inventory system, the cost of merchandise purchased includes the cost of freight-in True False 11 As we compare a merchandise business to a service business, the financial statement that changes the most is the Balance Sheet True False 12 When a merchandising business is compared to a service business, the financial statement that is not affected by that change is the Statement of Owner's Equity True False 13 The ending merchandise inventory for 2010 is the same as the beginning merchandise inventory for 2011 True False 14 In a multiple-step income statement the dollar amount for income from operations is always the same as net income True False 15 Net sales is equal to sales minus cost of merchandise sold True False 16 Gross profit minus selling expenses equals net income True False 17 The form of the balance sheet in which assets, liabilities, and owner's equity are presented in a downward sequence is called the report form True False 18 On the income statement in the single-step form, the total of all expenses is deducted from the total of all revenues True False 19 The single-step income statement is easier to prepare, but a criticism of this format is that gross profit and income from operations are not readily available True False 20 Income that cannot be associated definitely with operations, such as a gain from the sale of a fixed asset, is listed as Other Income on the multiple-step income statement True False 21 Freight in is the amount paid by the company to deliver merchandise sold to a customer True False 22 In the merchandising income statement, sales will be reduced by sales discounts and sales returns and allowances to arrive at net sales True False 23 Other income and expenses are items that are not related to the primary operating activity True False 24 Freight-in is considered a cost of purchasing inventory True False 25 The cost of merchandise inventory is limited to the purchase price less any purchase discounts True False 26 Cost of Merchandise Sold is often the largest expense on a merchandising company income statement True False 27 Under the perpetual inventory system, when a sale is made, both the sale and cost of merchandise sold are recorded True False 28 Under the periodic inventory system, the cost of merchandise sold is recorded when sales are made True False 29 If payment is due by the end of the month in which the sale is made, the invoice terms are expressed as n/30 True False 30 When merchandise that was sold is returned, a credit to sales returns and allowances is made True False 31 In a perpetual inventory system, when merchandise is returned to the seller, Cost of Merchandise Sold is debited as part of the transaction True False 32 Sales Returns and Allowances is a contra-revenue account True False 33 Sales Discounts is a revenue account with a credit balance True False 34 Sales to customers who use bank credit cards, such as MasterCard and VISA, are generally treated as credit sales True False 35 Sales to customers who use nonbank credit cards, such as American Express, are generally treated as credit sales True False 36 Retailers record all credit card sales as credit sales True False 37 The service fee that credit card companies charge retailers varies and is the primary reason why some businesses not accept all credit cards True False 38 A seller may grant a buyer a reduction in selling price and this is called a sales allowance True False 39 The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable True False 40 Merchandise Inventory normally has a debit balance True False 41 A buyer who acquires merchandise under credit terms of 1/10, n/30 has 30days after the invoice date to take advantage of the cash discount True False 42 Discounts taken by the buyer for early payment of an invoice are credited to Sales Discounts by the buyer True False 43 In a perpetual inventory system, merchandise returned to vendors reduces the merchandise inventory account True False 44 Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30 If payment is made within 10 days of the purchase, the entry to record the payment will include a credit to Cash and a credit to Purchase Discounts True False 45 Purchases of merchandise are typically credited to the merchandise inventory account under the perpetual inventory system True False 46 When the seller offers a sales discount, even if borrowing has to be done, it is generally advantageous for the buyer to pay within the discount period True False 47 When a large quantity of merchandise is purchased, a reduction allowed on the sale price is called a trade discount True False 48 A deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called cash discounts True False 49 Sellers and buyers are required to record trade discounts True False 50 If the ownership of merchandise passes to the buyer when the seller delivers the merchandise for shipment, the terms are stated as FOB destination True False 51 A sale of $750 on account, subject to a sales tax of 6%, would be recorded as an account receivable of $750 True False 52 When merchandise is sold for $600 plus 6% sales tax, the Sales account should be credited for $636 True False 53 The abbreviation FOB stands for Free On Board True False 54 Merchandise is sold for $3,600, terms FOB destination, 2/10, n/30, with prepaid freight costs of $150 If $500 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $65 True False 55 If the buyer bears the freight costs related to a purchase, the terms are said to be FOB destination True False 56 When the terms of sale are FOB shipping point, the buyer should pay the freight charges True False 57 If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70 True False 58 The chart of accounts for a merchandise business would include an account called Delivery Expense True False 59 There is no difference between the recording of cash sales and the recording of MasterCard or VISA sales True False 60 When companies use a perpetual inventory system, the recording of the purchase of inventory will include a debit to purchases True False 61 Most companies will not take a purchases discount, because 1% or 2% discounts are insignificant True False 62 The seller may prepay the freight costs even though the terms are FOB shipping point True False 63 The seller records the sales tax as part of the sales amount True False 64 The buyer will include the sales tax as part of the cost of items purchased for use True False 65 A business using the perpetual inventory system, with its detailed subsidiary records, does not need to take a physical inventory True False 66 Title to merchandise shipped FOB shipping point passes to the buyer upon delivery of the merchandise to the buyer's place of business True False 67 Purchased goods in transit should be included in the ending inventory of the buyer if the goods were shipped FOB shipping point True False 68 Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory of the buyer True False 69 If the perpetual inventory system is used, an account entitled Cost of Merchandise Sold is included in the general ledger True False 70 The adjusting entry to record inventory shrinkage would generally include a debit to Cost of Merchandise Sold True False 71 Closing entries for a merchandising business are not similar to those for a service business True False 72 The ratio of net sales to assets measures how effectively a business is using its assets to generate sales True False 73 Because many companies use computerized accounting systems, periodic inventory is widely used True False 74 Computerized systems can be used to capture accounting information such as accounts receivable, inventory items, accounts payable, and sales True False 75 The accounts Purchases, Purchases Returns and Allowances, Purchases Discounts, and Freight In are found on the balance sheet True False 76 Match each of the following terms with the appropriate definition below Account used to record merchandise purchased under a periodic inventory system Account used to record shipping cost of merchandise by the buyer under a periodic inventory system Expense account for recording shipping costs paid by the seller Account where returned merchandise or price adjustments are recorded by the seller Early payment discount offered to customers by the seller Discounts off the list price offered by wholesalers Account used to record merchandise purchased under a perpetual inventory system Account where returned merchandise or price adjustments are recorded by the buyer under the periodic inventory system Purchases Merchandise Inventory Sales Discounts Delivery Expense Trade Discount Purchase Returns and Allowances Freight In Sales Returns and Allowances 77 Match each of the following terms with the correct definition below Shipping terms where the ownership of merchandise passes to the buyer when the buyer receives the merchandise Shipping terms where the ownership of merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier Statement where net income is determined by deducting all expenses from all revenues Statement that includes subtotals for net sales, gross profit and net operating income in determining net income Inventory system that updates the Merchandise Inventory account only at the end of the accounting period based on a physical count of merchandise on hand Inventory system that updates the Merchandise Inventory account for every purchase and sale transaction Payment arrangements determined by the seller as to when invoices are due and whether early payment discount is offered Losses of inventory due to theft, damage, spoilage, etc that cause the actual inventory on hand to be less than that on record FOB Destination Inventory Shrinkage Single-Step Income Statement Credit terms Perpetual Inventory system Periodic Inventory system Multiple-Step Income Statement FOB Shipping Point 78 Which one of the following is not a difference between a retail business and a service business? A in what is sold B the inclusion of gross profit in the income statement C accounting equation D merchandise inventory included in the balance sheet 79 Net income plus operating expenses is equal to A cost of merchandise sold B cost of merchandise available for sale C net sales D gross profit 80 Generally, the revenue account for a merchandising business is entitled A Sales B Fees Earned C Gross Sales D Gross Profit Seller Accounts Buyer DR CR DR CR (a) Seller Buy er Accounts Receivable Sales 4,750 Cost of Merchandise Sold Merchandise Inventory 2,850 Accounts Receivable Cash (b) Sales Returns & Allow Accounts Receivable Merchandise Inventory Cost of Merchandise Sold (c) Cash Sales Discounts Accounts Receivable 4,750 Merchandise Inventory Accounts Payable 2,850 NA 75 Merchandise Inventory Accounts Payable 75 700 700 4,750 4,750 75 75 Accounts Payable Merchandise Inventory 700 Accounts Payable Merchandise Inventory Cash 4,050 700 420 420 3,969 81 4,050 81 3,969 212 Details of a purchase invoice and related credit memo are summarized as follows: Invoice: Cost of merchandise listed on purchase invoice Prepaid freight charge added to invoice Terms, FOB shipping point, 1/10, n/eom Credit memo: Cost of merchandise returned $6,500 150 $1,500 Assume that the credit memo was received prior to payment and that the invoice is paid within the discount period Determine the following: (a) (b) (c) Amount of the cash discount allowed Amount to be paid by the purchaser if the discount is taken Cost of the merchandise to the purchaser if the discount is NOT taken (a) (b) (c) $50 $5,100 $5,150 213 Conquest Company uses a perpetual inventory system Conquest purchased $1,500 of merchandise on account and payment was made within the discount period The credit terms were 2/10,n/30 Journalize Conquest’s purchase and payment (a) (b) Merchandise Inventory Accounts Payable 1,500 Accounts Payable Cash Merchandise Inventory 1,500 1,500 1,470 30 214 Merchandise with a list price of $4,700 is purchased on account, terms FOB shipping point, 1/10, n/30 The seller prepaid freight costs of $100 Prior to payment, $1,400 of the merchandise is returned The correct amount is paid within the discount period Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used (a) (b) (c) (a) (b) (c) Purchased the merchandise Recorded receipt of the credit memo for merchandise returned Paid the amount owed Merchandise Inventory Accounts Payable 4,800 Accounts Payable Merchandise Inventory 1,400 Accounts Payable Cash Merchandise Inventory 3,400 4,800 1,400 3,367 33 215 Details of invoices for purchases of merchandise are as follows: (a) (b) (c) (d) Merchandise $2,800 7,600 1,400 500 Freight $45 55 - Returns and Allowances $200 800 600 Terms FOB shipping point, 1/10, n/30 FOB destination, n/30 FOB shipping point, 2/10, n/30 FOB destination, 1/10, n/30 Determine the amount to be paid in full settlement of each of the invoices, assuming that credit for returns and allowances was received prior to payment and that all invoices were paid within the discount period (a) (b) (c) (d) $2,619 ($2,800 - $200 - $26 + $45) $6,800 ($7,600 - $800) $839 ($1,400 - $600 - $16 + $55) $495 ($500 - $5) 216 Journalize the entries to record the following selected transactions: (a) (b) (a) (b) Sold $900 of merchandise on account, subject to 7% sales tax The cost of the merchandise sold was $510 Paid $436 to the state sales tax department for taxes collected Accounts Receivable Sales Sales Tax Payable 963 Cost of Merchandise Sold Merchandise Inventory 510 Sales Tax Payable Cash 436 900 63 510 436 217 Using the letter preceding each account, arrange the following selected accounts in the order they would normally appear in a chart of accounts of a company that uses a multiple-step income statement (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Accounts Payable Accounts Receivable Merchandise Inventory Miscellaneous Selling Expense Sales Discounts Interest Expense Income Summary Misc Admin Expense Freight Out Sales Returns and Allowances (b) (c) (a) (g) (j) (e) (i) (d) (h) (f) OR (b) (c) (a) (g) (e) (j) (i) (d) (h) (f) 218 Gadget Palace is a retailer selling unique hardware Gadget Palace uses perpetual inventory Use a General Journal to journalize the following four transactions during the month of August: (a) (b) (c) (d) On July 5th, Gadget Palace purchases inventory for sale from Turbo Tools for $11,400.00 with terms 2/10, n/30 On July 6th, Gadget Palace pays Fast Truck Transport $75 for freight-in on the July 5th order Gadget Palace gets a credit memo from Turbo Tools for $215.00 for damaged merchandise on July 8th On July 15th, Gadget Palace pays Turbo Tools the balance due Ge neral Journal Date: Account Title Debit: Credit: Ge neral Journal Date: Account Title July Merchandise Inventory A/P - Turbo Tools Debit: 11,400.00 11,400.00 July Merchandise Inventory Cash 75.00 A/P - Turbo Tools Merchandise Inventory 215.00 A/P - Turbo Tools Cash Merchandise Inventory 11,185.00 July July 15 Credit: 75.00 215.00 10,961.30 223.70 Computation of payment: Purchase: Less credit memo: Balance: Discount - 2% of balance: Cash paid: $11,400.00 215.00 11,185.00 223.70 $10,961.30 While inventory is debited for the value of freight-in, $75.00, this value is paid directly to the truck company and is not discounted 219 Marshall Supplies is a janitorial supply store Marshall Supplies uses perpetual inventory Use a General Journal to journalize the following four transactions during the month of July: (a) (b) (c) (d) On July 4th, Marshall purchases inventory for sale from Tidy Wholesalers for $8,500.00 with terms 1/10, n/30 On July 5th, Marshall pays Express Transfer $45 for freight-in on the July 4th order On July 12th, Marshall buys an additional $11,985 in inventory from Tidy Wholesalers with terms 1/10, n/30 On July 22nd, Marshall pays Tidy Wholesalers the balance due Ge neral Journal Date: Account Title General Journal Date: July Debit: Account Title Merchandise Inventory A/P - Tidy Wholesalers Debit: 8,500.00 8,500.00 Merchandise Inventory Cash 45.00 July 12 Merchandise Inventory A/P - Tidy Wholesalers 11,985.00 11,985.00 July 22 A/P - Tidy Wholesalers Cash Merchandise Inventory 20,485.00 July Computation of payment: Purchase July 4th: - Discount period expired Purchase July 12th: Discount - 1% of balance: Amount due on purchase Cash paid: Credit: Credit: 45.00 20,365.15 119.85 $8,500.00 $11,985.00 119.85 11,865.15 $20,365.15 While inventory is debited for the value of freight-in, $45.00, this value is paid directly to the truck company and is not discounted 220 Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies Bargain Wholesalers uses perpetual inventory Use a General Journal to journalize the following three transactions during the month of May: (a) (b) (c) On May 4th, Bargain Wholesalers sells inventory to Pet World Supplies for $8,250.00 with terms 1/10, n/30 The cost of the merchandise is $5,755.00 On May 13th, Bargain Wholesalers sells an additional $10,985 in inventory to Pet World Supplies with terms 1/10, n/30 The cost of the merchandise is $6,925.00 On May 23rd, Bargain Wholesalers receives a check from Pet World Supplies paying the balance due Ge neral Journal Date: Account Title GJ Page 85 Post Ref: Debit: General Journal Date: May May 13 May 23 Credit: GJ Page 63 Account Title Post Ref: Debit: A/R - Pet World Supplies Sales Cost of Merchandise Sold Merchandise Inventory 8,250.00 A/R - Pet World Supplies Sales Cost of Merchandise Sold Merchandise Inventory 10,985.00 Cash Sales Discounts A/R - Pet World Supplies 19,125.15 109.85 Credit: 8,250.00 5,755.00 5,755.00 10,985.00 6,925.00 6,925.00 19,235.00 Computation of payment: Sale on May 4th: - Discount period expired Sale on May 13th: Discount - 1% of balance: Amount due on May 13th sales Cash paid: $8,250.00 $10,985.00 109.85 10,875.15 $19,125.15 221 On March 3rd, Blowout Sales makes $3,450.00 in cash sales of general merchandise which have a cost of $1,215.00 Blowout uses a perpetual inventory system (a) Journalize the sale event (b) Journal the cost of merchandise sold (a) Mar 3rd Cash Sales 3,450.00 (b) Mar 3rd Cost of Merchandise Sold Merchandise Inventory 1,215.00 3,450.00 1,215.00 222 On March 5th, Blowout Sales makes $22,500.00 in sales on the company’s own credit cards The cost of merchandise sold are $16,825.00 Journalize the sales and recognition of the cost of merchandise sold Mar Accounts Receivable Sales Cost of Merchandise Sold Merchandise Inventory 22,500.00 22,500.00 16,825.00 16,825.00 223 On March 15th Monroe Sales sells $9,525.00 on account to Garrison Brewer with terms of 2/10, n/30 The cost of merchandise sold was $6,905.00 (a) Journalize the sale and the recognition of the cost of the sale (b) On March 20th a $125.00 credit memo is given to Garrison Brewer due to merchandise that was the wrong color Journalize this event The cost of the returned merchandise was $65 (c) On March 25th Garrison Brewer submits payment in full Journalize this event (a) Accounts Receivable - Garrison Brewer Sales Cost of Merchandise Sold Merchandise Inventory 9,525.00 9,525.00 6,905.00 6,905.00 (b) Sales Returns and Allowances Accounts Receivable - Garrison Brewer Merchandise Inventory Cost of Merchandise Sold (c) Cash Sales Discounts Accounts Receivable - Garrison Brewer Original Invoice Less Sales Returns and Allowances Adjusted Balance Due Sales Discount Rate Sales Discount Cash Due 125.00 125.00 65.00 65.00 9,212.00 188.00 9,400.00 $9,525.00 125.00 9,400.00 2% 188.00 $9,212.00 224 Journalize the following transactions assuming the perpetual inventory system: July July July 12 July 17 Sold merchandise on account $3,750 The cost of the merchandise sold was $2,000 Issued credit memo for $1,050 for merchandise returned from sale on July 3rd The cost of the merchandise returned was $610 Received check for the amount due for sale on July 3rd less return on July 5th Sold merchandise for $7,000 plus 6% sales tax to cash customers The cost of the merchandise sold was $3,830 Journal Post Ref Date Description Debit Credit Journal Post Ref Date July July July 12 July 17 Description Accounts Receivable Sales Debit 3,750 Cost of Merchandise Sold Merchandise Inventory 2,000 Sales Returns Accounts Receivable 1,050 Merchandise Inventory Cost of Merchandise Sold 610 Cash Accounts Receivable 2,700 Cash Sales Sales Tax Payable 7,420 Cost of Merchandise Sold Merchandise Inventory 3,830 Credit 3,750 2,000 1,050 610 2,700 7,000 420 3,830 225 Journalize the following transactions assuming a perpetual inventory system.: May May 12 May 14 Purchased merchandise from Archie Co., $6,000, terms FOB shipping point, 2/10, n/30 Prepaid freight costs of $100 were added to the invoice Issued a debit memo to Archie Co., for $2,500 of merchandise returned from purchase on May 5th Paid Archie Co for invoice of May 5, less debit memo of May 12 and discount Journal Post Ref Date Description Debit Credit Journal Post Ref Date May May 12 May 14 Description Merchandise Inventory Accounts Payable Debit 6,000 Merchandise Inventory Accounts Payable 100 Accounts Payable Merchandise Inventory 2,500 Accounts Payable Merchandise Inventory Cash 3,600 Credit 6,000 100 2,500 70 3,530 226 Record the following transactions for Sparky’s Pet Shop using the general journal form provided below Assume Sparky’s uses a perpetual inventory system Omit transaction descriptions from entries: Date August August August August 10 August 11 August 20 Transaction Purchased $6,000 of merchandise on account, terms 2/10, n/30 Returned $1,500 of merchandise purchased on August due to defects Recorded cash sales for the first week of August $9,750; cost of the merchandise was $4,000 Sale on account made to a local breeder for $500, terms 1/10 net 30; cost of the merchandise was $200 Paid for the merchandise purchased on August 1, less return Received payment from sale of August 10 The customer took the discount Date Date 08/01 08/03 08/07 08/10 08/11 08/20 Accounts Debit Credit Accounts Merchandise Inventory Accounts Payable Debit 6,000 Accounts Payable Merchandise Inventory 1,500 Cash Sales Cost of Merchandise Sold Merchandise Inventory 9,750 Accounts Receivable Sales Cost of Merchandise Sold Merchandise Inventory 500 Accounts Payable Merchandise Inventory Cash 4,500 Cash Sales Discount Accounts Receivable 495 Credit 6,000 1,500 9,750 4,000 4,000 500 200 200 90 4,410 500 227 Journalize the following transactions for both Abbott Co (seller) and Dalton Co (buyer) Assume both the companies use the perpetual inventory system July July July July 11 Date Date July Abbott Co.sold merchandise on account to Dalton Co., $7,500, terms FOB shipping point, net/eom The cost of the merchandise sold was $4,400 Dalton Co paid $275 freight charges on purchase from Abbott Co Abbott Co issued Dalton Co a credit memo for merchandise returned, $2,250 The cost of the merchandise returned was $1,325 Abbott Co received payment from Dalton Co for purchase of July Abbott Co Dalton Co Accounts Debit Credit Abbott Co Dalton Co Description Accounts Receivable Sales Debit 7,500 Cost of Merchandise Sold Merch Inventory 4,400 Credit 7,500 July 11 Debit Description Merchandise Inventory Accounts Payable Debit 7,500 Merchandise Inventory Cash 275 Accounts Payable Merch Inventory 2,250 Accounts Payable Cash 5,250 Credit Credit 7,500 4,400 July July Accounts Sales Returns and Allow Accounts Receivable 2,250 Merchandise Inventory Cost of Merchandise Sold 1,325 Cash Accounts Receivable 5,250 2,250 275 2,250 1,325 5,250 5,250 228 Construct a chart of accounts, assigning account numbers and arranging the accounts in balance sheet and income statement order (“1” for assets, and so on) Each account number is three digits Contra accounts should designated with a decimal of the account (100.1 for contra of account 100) Assets and liabilities should be in order of liquidity, expenses should be in alphabetical order Accounts Payable Accounts Receivable Accumulated Depr - Equip Advertising Expense Capital, Owner Cash Cost of Merchandise Sold Depreciation Expense - Equip Drawing, Owner Acct No 100 103 105 107 110 120 120.1 200 202 204 207 300 Description Cash Accounts Receivable Merchandise Inventory Office Supplies Land Equipment Accumulated Depr - Equip Accounts Payable Salaries Payable Unearned Revenue Notes Payable Capital, Owner Equipment Land Merchandise Inventory Notes Payable Office Supplies Utilities Expense Unearned Revenue Salaries Expense Freight Out Acct No 302 400 400.1 400.2 500 502 504 507 509 511 513 Supplies Expense Salaries Payable Sales Sales Discounts Sales Returns & Allowances Description Drawing, Owner Sales Sales Discounts Sales Returns & Allowances Cost of Merchandise Sold Advertising Expense Depreciation Expense - Equip Freight Out Salaries Expense Supplies Expense Utilities Expense 229 Journalize the following transactions for the Evans Company Assume the company uses a perpetual inventory system Sells merchandise for $645 Cost of merchandise sold $375 Sells merchandise for $432 and accepts VISA as the form of payment Cost of merchandise sold $195 Sells merchandise on account for $670 Cost of merchandise sold $438 Credit card fees paid for the month is $85 Journal Date P 46 Description Journal Date 1) P 46 Description Cash Sales 2) Debit Debit 645 4) Credit 645 Cost of merchandise sold Merchandise inventory 375 Cash 432 375 Sales 3) Credit 432 Cost of merchandise sold Merchandise inventory 195 Accounts receivable Sales 670 Cost of merchandise sold Merchandise inventory 438 Credit card expense Cash 85 195 670 438 85 ... by the FASB for all merchandising businesses D always uses a three-digit numbering system 137 Cumberland Co sells $2,000 of inventory to Hancock Co for cash Cumberland paid $1,250 for the merchandise... presented on a page in a downward sequence, it is called the A account form B comparative form C horizontal form D report form 90 The statement of owner's equity shows A only net income, beginning... record the sale would include a A debit to Cash for $6,000 B Debit to Sales Discounts for $120 C Credit to Sales for $6,000 D Debit to Accounts Receivable for $5,880 113 Merchandise subject to terms