14 a merchandiser uses a perpetual inventory system the third step in the process of 4307073

14 a merchandiser uses a perpetual inventory system the third step in the process of 4307073

14) A merchandiser uses a perpetual inventory system. The third step in the process of closing the accounts of a merchandiser is to:

A) make the revenue accounts equal to zero via the Income Summary account.

B) make the Income Summary account equal to zero via the Owner's Name, Withdrawals account.

C) make the expense accounts equal to zero via the Income Summary account.

D) make the Income Summary account equal to zero via the Owners' Name, Capital account.

15) A merchandiser uses a perpetual inventory system. The beginning Capital balance of a merchandiser was $100,000. During the year, sales revenue amounted to $75,000, sales returns and allowances were $1,000, sales discounts were $3,000, cost of goods sold was $40,000, and all other expenses totaled $10,000. The total withdrawals amounted to $25,000.The last step in the closing process would include:

A) a debit to Income Summary for $54,000.

B) a credit to Income Summary for $75,000.

C) a debit to Owner's Name, Capital for $21,000.

D) a debit to Owner's Name, Capital for $25,000.

16) A merchandiser uses a perpetual inventory system. The beginning Capital balance of a merchandiser was $100,000. During the year, sales revenue amounted to $75,000, sales returns and allowances were $1,000, sales discounts were $3,000, cost of goods sold was $40,000, and all other expenses totaled $10,000. The total withdrawals amounted to $25,000. The closing balance of Capital would be:

A) $99,000

B) $96,000

C) $90,000

D) $100,000

17) The trial balance of a merchandiser is as follows. A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand. (Assume a perpetual inventory system)

DebitCredit

Cash$12,600

Accounts Receivable2,400

Prepaid Rent800

Merchandise Inventory30,000

Accounts Payable$4,200

Salaries Payable1,000

Notes Payable800

Smith, Capital13,800

Smith, Withdrawals1,000

Sales Revenue96,000

Sales Returns and Allowances1,600

Sales Discounts400

Cost of Goods Sold23,000

Salaries Expense21,000

Rent Expense14,000

Depreciation Expense8,500

Supplies Expense500      

Total$115,800$115,800

Give journal entry to record the inventory shrinkage.

18) An adjusted trial balance of a merchandiser is given below.

DebitCredit

Cash$12,600

Accounts Receivable2,400

Prepaid Rent800

Merchandise Inventory30,000

Accounts Payable$4,200

Salaries Payable1,000

Notes Payable800

Smith, Capital13,800

Smith, Withdrawals1,000

Sales Revenue96,000

Sales Returns and Allowances1,600

Sales Discounts400

Cost of Goods Sold23,000

Salaries Expense21,000

Rent Expense14,000

Administrative Expenses8,500

Supplies Expense500     

Total$115,800$115,800

19) An adjusted trial balance of a merchandiser is given below.

DebitCredit

Cash$12,600

Accounts Receivable2,400

Prepaid Rent800

Merchandise Inventory30,000

Accounts Payable$4,200

Salaries Payable1,000

Notes Payable800

Smith, Capital13,800

Smith, Withdrawals1,000

Sales Revenue96,000

Sales Returns and Allowances1,600

Sales Discounts400

Cost of Goods Sold23,000

Salaries Expense21,000

Rent Expense14,000

Administrative Expenses8,500

Supplies Expense500      

Total$115,800$115,800

Give journal entry to close the expense accounts and contra revenue accounts with a debit balance.

20) An adjusted trial balance of a merchandiser is given below.

DebitCredit

Cash$12,600

Accounts Receivable2,400

Prepaid Rent800

Merchandise Inventory30,000

Accounts Payable$4,200

Salaries Payable1,000

Notes Payable800

Smith, Capital13,800

Smith, Withdrawals1,000

Sales Revenue96,000

Sales Returns and Allowances1,600

Sales Discounts400

Cost of Goods Sold23,000

Salaries Expense21,000

Rent Expense14,000

Administrative Expense8,500

Supplies Expense500      

Total$115,800$115,800

Provide journal entries to close the Income Summary account and the Smith, Withdrawals account.

Learning Objective 5-5

1) Cost of goods sold appears on a multi-step income statement but not on a single-step income statement.

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