1. Another name for temporary accounts is:
A) Real accounts.
B) Contra accounts.
C) Accrued accounts.
D) Balance column accounts.
E) Nominal accounts.
2. The Income Summary account is used:
A) To adjust and update asset and liability accounts.
B) To close the revenue and expense accounts.
C) To determine the appropriate withdrawal amount.
D) To replace the income statement under certain circumstances.
E) To replace the capital account in some businesses.
3. Sales returns and allowances:
A) Can provide useful information about dissatisfied customers and the possibility of lost future sales.
B) Are recorded in separate contra-revenue accounts.
C) Are rarely disclosed in published financial statements.
D) Are closed to the Income Summary account.
E) All of the above.
4. An income statement that includes cost of goods sold as another expense and shows only one subtotal for total expenses is a:
A) Balanced income statement.
B) Single-step income statement.
C) Multiple-step income statement.
D) Combined income statement.
E) Simplified income statement.
Steve's Skateboards uses the perpetual inventory system and had the following sales transactions during April:
April 2: Sold Merchandise to Happy Hobby shop on credit for $4,800, terms 1/15, n/60. The items sold had a cost of $2,700.
April 4: Happy Hobby Shop returned merchandise that had a selling price of $200. The cost of the merchandise was $110.
April 13: Happy Hobby Shop paid for the merchandise sold on April 2, taking any appropriate discount earned.
Prepare the journal entries that Steve's Skateboards must make to record these transactions.