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    The following are selected transactions of a Detroit Company...

    71. The current portion of long-term debt should
    a. be paid immediately.
    b. be reclassified as a current liability.
    c. be classified as a long-term liability.
    d. not be separated from the long-term portion of debt.
    72. Sales taxes collected by a retailer are expenses
    a. of the retailer.
    b. of the customers.
    c. of the government.
    d. that are not recognized by the retailer until they are submitted to the government.
    73. A retailer that collects sales taxes is acting as an agent for the
    a. wholesaler.
    b. customer.
    c. taxing authority.
    d. chamber of commerce.
    74. Sales taxes collected by a retailer are reported as
    a. contingent liabilities.
    b. revenues.
    c. expenses.
    d. current liabilities.

    75. A cash register tape shows cash sales of $3,000 and sales taxes of $150. The journal entry to record this information is
    a. Cash 3,000
    Sales 3,000
    b. Cash 3,150
    Sales Tax Revenue 150
    Sales 3,000
    c. Cash 3,000
    Sales Tax Expense 150
    Sales 3,150
    d. Cash 3,150
    Sales 3,000
    Sales Taxes Payable 150

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    JOURNAL ENTRY
    JAN 2 1.PURCHASES A/C 15000
    TERESSA SPECK COMPANY 15000

    FEB1 2. TERESSA SPECK COMPANY 15000
    NOTES PAYABLE A/C 15000
    MAR 31 3. INTEREST EXPENSE A/C 250
    INTEREST PAYABLE A/C 250
    APR1 4. NOTES PAYABLE A/C 15000
    INTEREST PAYABLE A/C 250
    CASH 15250
    JULY1 5. PURCHASES A/C 35000
    CASH 11000
    SCOTTLE EQUIPMENT 24000
    JULY1 6. SCOTTLE EQUIPMENT 24000
    NOTES PAYABLE A/C 24000
    Sep. 30 INTEREST EXPENSE A/C 600
    INTEREST PAYABLE A/C 600

    Oct1. 7. NOTES PAYABLE A/C 24000
    INTEREST PAYABLE A/C 600
    CASH 24600

    DEC1 8.CASH 10000
    TO NOTES PAYABLE 10000
    Dec 31 9. INTEREST EXPENSE A/C 90
    INTEREST PAYABLE A/C 90
    INTEREST PAYABLE A/C
    Dr. IN$ Cr. IN$
    Date Particulars Amount Date Particulars Amount
    APR1 ...

    Solution Summary

    This explains the concept of journal entries through examples.

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