ABC Co. purchased merchandise on August 5 at a $1,000 invoice price with terms of 2/10,n/30 and paid for the merchandise on August 14.

In preparing a monthly bank reconciliation, a business follows several steps. Place the selected steps
below in the correct order of occurrence.


Identify the bank statement balance then add any deposits in transit and subtract any
outstanding checks.
Compute the adjusted bank balance.
Identify the company's book balance.
Add any unrecorded credit memoranda from the bank, interest earned, and errors understating
the book balance.
Identify and list any unrecorded debit memoranda from the bank, service charges, and errors
overstating the book balance.
Compute the adjusted book balance and compare it to the adjusted bank balance to verify
equality.


Brown Co. decides to increase the amount in its petty cash fund from 100 to $150. To show this increase
in the petty cash account, you would:

 debit Petty cash for $50.
debit Petty Cash for $150.
credit Cash for $150.
debit cash for $50.


ABC Co. purchased merchandise on August 5 at a $1,000 invoice price with terms of 2/10,n/30 and paid
for the merchandise on August 14. Determine its entry to record this purchase and the subsequent
payment under both the gross method and the net method by matching the action on the left with the
method on the right. (Assume a perpetual inventory system.)

Cash would be credited for $980 on August                       Both methods
14.
Merchandise inventory would be debited for                       Net rnethod
$980 on August 5.
Merchandise Inventory would be credited for                      Gross method
$20 on August 14.
Discounts Lost would be debited for $20 on                       Neither method
August 14.