Cash Receipts Practice Exercises

Answer Key

1. Products that are bought and sold as Inventory are (select one):
✔ Tracked
__Not tracked

2. When you set up an inventory product in QBO, what do you put in the
initial quantity field?

Answer: _Always leave as zero_________________________________________

3. Information entered in Sales Information is seen by whom?

__ Internal use only
✔ Customers

4. The amount the company pays for the product is entered in as :

__ Sales price
✔ Cost of goods price

5. Is a Service an Inventory or Non-inventory item?

__ Inventory
✔ Non-inventory

6. The Sales Price should be coded with what type of account:

✔ Income
__ Cost of Goods Sold

7. The cost should be coded with what type of account:

__ Income
__ Expense
✔ Cost of Goods Sold

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8. Your client obtained a new customer--Joe Jones--and needs to have
them set up in QBO.
Joe’s Bait Shop
888 Magnolia Lane
Anytown, WY 88855
[email protected]

Identify the following:

a. Customer Name: Joe Jones

b. Company Name: Joe’s Bait Shop
c. Display Name: Joe’s Bait Shop
d. Best way to deliver invoices: Email ([email protected])

9. For the month of October sales on account were as follows:

The Smiths charged $200 on October 5, 20XX

The Jones charged $325 on October 15, 20XX
Joe’s Bait Shop charged $575 on October 28, 20XX

a. Record the sale on account in the sales journal

Date Account Amount

10/5/20XX Smiths 200.00
10/15/20XX Jones 325.00
10/28/20XX Joe’s Bait Shop 575.00

b. At the end of the month, add up the amount column and

post the total to the general ledger:

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 Accounts Receivable
1100

Sales Revenue

1100

10. What is the main difference between Voiding and Deleting an Invoice?

Answer: Voiding keeps the invoice but zero’s out the amounts. Deleting
gets rid of the invoice.

11. In the More options tab, where would you look to find the debits and
credits that were created by the invoice?

Answer: _Transaction Journal_________________________________________

12. In the Recurring options, what option allows you to send out an invoice
at the same time each month automatically?

Answer: _Scheduled___________________________________________

13. Joe’s Bait Shop has the following receipts in the month of June:

Received $300 for merchandise they returned to a vendor on June 1,

20XX
Cash sale of $50 for tackle on June 5, 20XX
Collected $150 on account for Bobbers Inc on June 9, 20XX

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 Cash sale of $435 in live bait on June 16, 20XX
Collected $500 on account for Jim’s Tackle on June 29, 20XX

a. Record the Cash Receipts Journal for the above transactions

Cash Receipts Journal

Cash Sales Rev Returns
Date Account Credited Debit A/R Credit Credit Credit
6/1/20X Purchase returns 300 300
6/5/20XX Cash sales 50 50
6/9/20XX Bobbers Inc 150 150
6/16/20XX Cash sales 435 435
6/29/20XX Jim’s Tackle 500 500
1,435 650 485 300

b. Record the General Ledger entries for the month (in summary):

Cash

1435

Sales Revenue

485

Accounts Receivable

650

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 Returns

300

14. A sales invoice was issued by Company A dated August 5 for $2000 and
has discount terms of 2/10, n30. If it is paid on August 10, what would
the entry be to record this transaction (in journal entry form)?

Account Debit Credit

Cash 1960
Sales Discounts 40
Accounts Receivable 2000

15. Record the following cash transactions in the journal:

A check received from Bobbers Inc for $480 in settlement of their $500
invoice on August 1, 20XX
Received $125 from Joe's Bait Shop in settlement of their $150 invoice
on August 18, 20XX
Received $576 from Rods & Reels in settlement of their $620 invoice on
August 30, 20XX

Sales Disc
Date Credit account Cash Debit Debit A/R Credit
8/1/20XX Bobbers Inc 480 20 500
8/18/20XX Joe’s Bait Shop 125 25 150
8/30/20XX Rods & Reels 576 44 620

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16. Joe's Bait Shop overpaid their balance on account by $380 in error.
Record in journal entry form the entry to refund Joe's Bait Shop their
overpayment.

Account Debit Credit

Accounts Receivable 380
Cash 380

17. Bobber's Inc purchased $500 worth of tackle that was defective and is
now returning the merchandise.

a. When an inventoried product (Product 2876) is returned, which

account should you use to record the return on the return
receipt?
__Returns and Allowances
✔ Product 2876

b. Record the journal entry associated with refunding a customer

for a return:

Account Debit Credit

Inventory: Product 2876 500
Cash 500

18. Bait & Things sold a $100.00 item (Product Z tackle) and two items
(Product X tackle) for $125 each to Joe at Joe's Bait Shop. Joe's Bait Shop
paid with a check that Bait & Things will take to the bank tomorrow.

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 a. How would the sales receipt look?

Description Quantity Amount Total

Product Z Tackle 1 $100.00 $100.00
Product X Tackle 2 $125.00 $250.00

b. Create the journal entries to record both of the sales.

Account Description Debit Credit

Undeposited Funds Record sale of tackle $350.00
Sales Record sale of tackle $350.00

c. Create the journal entries to record the deposit to the bank.

Account Description Debit Credit

Checking Record deposit of funds $350.00
Undeposited Funds Record deposit of funds $350.00

19. Bait & Things sells merchandise on account. Their sales and credits for
June are as follows:

Sold merchandise on account to Joe's Bait Shop for $500.00 on June 2,

20XX
Sold merchandise on account to The Fishing Guys for $375.00 on June
10, 20XX
Issued a credit for returned merchandise to Joe's Bait Shop for $125.00
on June 12, 20XX
Sold merchandise on account to Bobbers Inc for $410.00 on June 19,
20XX

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Issued a credit for returned merchandise to The Fishing Guys for $75.00
on June 23, 20XX

a. Record June transactions in the Sales Journal and the General

Journal below.

Sales Journal
Date Account Amount
6/2/20XX Joe’s Bait Shop 500
6/10/20XX The Fishing Guys 375
6/19/20XX Bobbers Inc 410

1285

General Journal
Date Description Debits Credits
6/12/20XX Sales Return 125
6/12/20XX A/R- Joe’s Bait Shop 125

6/23/20XX Sales Return 75

6/23/20XX A/R-The Fishing Guys 75

b. Based on the information above, post to the customers’ accounts.

Joe's Bait Shop

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 6/6 500 6/12 125

The Fishing Guys

6/10 375 6/23 75

Bobbers Inc
6/19 410

c. Prepare a schedule of Accounts Receivable based on the

information above.

Bobbers Inc 410

The Fishing Guys 300

Joe's Bait Shop 375

1085

d. Prepare account schedules for the subsidiary ledgers.

Accounts Receivable
6/30 1285 6/12 125

6/23 75

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 Sales Income
6/30 1285

Sales Returns
6/12 125

6/23 75

**Note that the balance in the subsidiary ledger for Accounts Receivable
should match the balance on the Accounts Receivable schedule.

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