Question

Johnson Co. sells goods to Jones Co. for $800, terms 2/10, n/30. If Johnson receives payment from Jones within the 2 percent discount period, then Johnson's journal entry would include a:

		debit to Accounts Receivable for $784.
		credit to Sales Discounts for $16.
		credit to Accounts Receivable for $784.
		debit to Cash for $784.

Which of the following would be found among the Selling expenses on the Income Statement?

		Interest Expense
		Advertising Expense
		Depreciation on office equipment
		Sales Discounts

On the Income Statement, "Gross Profit" is equal to "Net Sales" minus "Cost of Goods Sold".

		True
		False

Office Furniture in use by the company that won't be sold for at least ten years would be included in which section of the Balance Sheet?

		This account would be on the Income Statement instead of the Balance Sheet
		Current Assets
		Property, Plant, and Equipment
		Investments

Answer 1

1) Journal entry

Date	General Journal	Debit	Credit
	Cash (800*98%)	784
	Sales discount	16
	Account receivable		800

So answer is d) debit to Cash for $784.

2) Which of the following would be found among the Selling expenses on the Income Statement?

Advertising expense is selling expense

So answer is b) Advertising expense

3) On the Income Statement, "Gross Profit" is equal to "Net Sales" minus "Cost of Goods Sold".

Yes, It is true that Gross profit = Net Sales-Cost of goods sold

4) Office Furniture in use by the company that won't be sold for at least ten years would be included in which section of the Balance Sheet?

So answer is c) Property, Plant, and Equipment