Multiple choice
Thehonest1. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
• August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
• August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
• September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
On August 5, 2005, which one of the following accounting entries, related to the $10,000 special order, should be recorded in Turnadot's financial accounting system?
• Debit accounts receivable $10,000; credit revenues $10,000
• Debit cash $3,000; credit revenues $3,000
• Debit cash $3,000; credit a liability 'advances from customers' $3,000
• Debit cash $3,000; debit accounts receivable $7,000; credit revenues $10,000
2. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
• August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
• August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
• September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
On August 5, 2005, which one of the following accounting entries, related to the $1,000 deposit paid to the supplier for the planters, should be recorded in Turnadot's financial accounting system?
• Debit the current asset 'advances to suppliers' $1,000; credit cash $1,000
• Debit inventory $1,000; credit cash $1,000
• Debit cost of goods sold $4,000; credit cash $1,000; credit accounts payable $3,000
• Debit cost of goods sold $1,000; credit revenues $1,000
3. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
• August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
• August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
• September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
On August 27, 2005, upon delivery of planters to Turnadot's warehouse and payment of $3,000 balance due to the supplier, which one of the following journal entries best reflects the economic impact of the transaction?
• Debit inventory $3,000; credit cash $3,000
• Debit inventory $4,000; credit the current asset 'advances to suppliers' $1,000; credit cash $3,000
• Debit cost of goods sold $4,000; credit cash $3,000; credit accounts payable $1,000
• Debit inventory $4,000; credit revenues $4,000
4. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
• August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
• August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
• September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
On September 5, 2005, when the planters are delivered and the balance of $7,000 due from the customer is collected, which one of the following journal entries best reflects the full economic impact of the special order on Turnadot's financial condition?
• Dr. Cash 7,000, Cr. Revenues 7,000 and
Dr. COGS 4,000, Cr. Inventory 4,000
• Dr. Cash 7,000, Cr. Revenues 7,000 and
Dr. Inventory 4,000, Cr. COGS 4,000
• Dr. Cash 7,000, Dr. Advances from customers (liability) 3,000, Cr. Revenues 10,000 and
Dr. COGS 4,000, Cr. Inventory 4,000
- 10 years ago
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