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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

For each of the following accounts, identify whether the normal balance is a debit or a credit. Also specify whether the account is a contra account.

  1. a. Sales Returns and Allowances
  2. b. Merchandise Inventory
  3. c. Sales
  4. d. d Freight In
  5. e. Purchases Returns and Allowances
  6. f. Sales Tax Payable
  7. g. Purchases

To determine

Indicate whether the given items are debited or credited in normal balance and also specify whether they are contra account.

Explanation

Merchandising businesses:

Merchandising companies which buy goods from suppliers, or manufacturers, and sell to retailers are referred to as merchandising businesses. These companies act as middlemen between manufacturing and retailing companies.

ItemsDebit/ CreditContra account
a. Sales return and allowancesDebitedContra account
b. Merchandise inventory Debited 
c. SalesCredited 
d. Freight inDebited 
e. Purchase returns and allowances CreditedContra account
f...

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