4 if a physical count of inventory indicates that the merchandise inventory account 4307056

4 if a physical count of inventory indicates that the merchandise inventory account 4307056

4) If a physical count of inventory indicates that the Merchandise Inventory account is overstated, an additional adjusting entry is required to record the difference.

5) The entry to close Cost of Goods Sold includes a debit to Income summary.

6) The inventory account balance is $50,000. An actual count of inventory reveals that actual inventory is $43,000. Which of the following would be included in the adjusting entry? (Assume a perpetual inventory system)

A) a $43,000 credit to Merchandise Inventory

B) a $50,000 debit to Cost of Goods Sold

C) a $7,000 credit to Cost of Goods Sold

D) a $7,000 credit to Merchandise Inventory

7) The Merchandise Inventory account of a company shows a balance of $50,000 but a physical count of inventory shows $48,000. Which of the following entries is required to record the shrinkage? (Assume a perpetual inventory system)

A)

Cost of Goods Sold

2,000

               Shrinkage Expense

2,000

B)

Merchandise Inventory

2,000

               Cost of Goods Sold

2,000

C)

Cost of Goods Sold

2,000

               Merchandise Inventory

2,000

D)

Cash

2,000

               Merchandise Inventory

2,000

8) The revenue, expenses, Sales Returns and Allowances and Sales Discounts will be closed via the:

A) Income Summary account.

B) Owner's Name, Capital account.

C) Owner's Name, Withdrawals account.

D) Fixed asset account.

9) The general ledger shows a balance of $67,900 in the Merchandise Inventory account at the end of the period. The physical inventory count shows inventory of $65,300. The adjusting entry includes a:

A) debit to Cost of Goods Sold and a credit to Merchandise Inventory for $2,600.

B) debit to Cost of Goods Sold and a credit to Cash for $2,600.

C) debit to Merchandise Inventory and a credit to Cost of Goods Sold for $2,600.

D) debit to Merchandise Inventory and a credit to Cash for $2,600.

10) The Income Summary account has a credit balance of $25,000 after the revenue and expense accounts have been closed. Which of the following is to be credited to close the Income Summary account?

A) Owner's Name, Withdrawals

B) Sales Revenue

C) Cost of Goods Sold

D) Owner's Name, Capital

11) An adjusted trial balance is given below.

Debit

Credit

Cash

$12,600

Accounts Receivable

2,400

Prepaid Rent

800

Merchandise Inventory

28,000

Accounts Payable

$4,200

Salaries Payable

1,000

Notes Payable

800

Smith, Capital

13,800

Smith, Withdrawals

1,000

Sales Revenue

96,000

Sales Returns and Allowances

1,600

Sales Discounts

400

Cost of Goods Sold

25,000

Salaries Expense

21,000

Rent Expense

14,000

Selling Expense

8,500

Supplies Expense

         500

Total

$115,800

$115,800

What will be the final balance in the Smith, Capital account after recording the closing entries?

A) $37,800

B) $12,700

C) $24,000

D) $36,800

12) Sales revenue of a merchandiser amounted to $20,000, sales returns and allowances amounted to $2,500, and sales discounts of $700. The merchandiser uses a perpetual inventory system. The first entry in the closing process would include:

A) a credit to Income Summary for $20,000.

B) a credit to Income Summary for $17,500.

C) a debit to Income Summary for $2,500.

D) a debit to Income Summary for $19,300.

13) A merchandiser had sales returns and allowances of $300, sales discounts of $700, cost of goods sold of $12,000, and all other expenses of $4,500. The merchandiser uses a perpetual inventory system. The second entry in the closing process would include:

A) a debit to Income summary for $17,500.

B) a credit to Income summary for $16,500.

C) a debit to Income summary for $4,500.

D) a debit to Income summary for $16,500.

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