Chp 4: Double entry recording

Question 1

Define trade discount

Answer 1

Trade discount is a reduction to the list price

Question 2

Explain why trade discount is given.

Answer 2

To encourage customers to buy in bulk

Question 3

Define cash discount.

Answer 3

Cash discount is a reduction to the invoiced price

Question 4

Explain why cash discount is given

Answer 4

To encourage credit customers to pay early within a specific time

Question 5

Journal entry: Owner contributed cash into business bank account

Answer 5

Question 6

Journal entry: Owner contributed vehicle into business.

Answer 6

Question 7

Journal entry: Business REPAID a bank loan.

Answer 7

Question 8

Journal entry: Owner withdrew goods for personal use

Answer 8

Question 9

Journal entry: Business paid rent by cheque

Answer 9

Question 10

Journal entry: Business received cash for rent

Answer 10

Question 11

Journal entry: Business bought inventory on CREDIT

Answer 11

Question 12

Journal entry: Business paid $80 cheque for amount owing to supplier $100

Answer 12

Question 13

Journal entry: Business RECEIVED $80 cheque for amount OWING From credit customer $100

Answer 13

Question 14

Journal entry: Cheque from credit customer $80 cheque was dishonoured and discount $20 was withdrawn

Answer 14

Question 15

Journal entry: Business sold goods costing $70 for $100 on credit

Answer 15

Question 16

Journal entry: Business took up a bank loan.

Answer 16