A Merchandiser Uses a Perpetual Inventory System

question 52

Multiple Choice

A merchandiser uses a perpetual inventory system.The beginning Owner,Capital balance of the merchandiser was $95,000.During the year,Sales Revenue amounted to $80,000,Sales Returns and Allowances were $1,300,Sales Discounts were $2,700,Cost of Goods Sold was $40,000,and all other expenses totaled $13,000.The company paid $24,000 in withdrawals to the owner.The last step in the closing process would include ________.

• A)a debit to Income Summary for $57,000
• B)a credit to Income Summary for $80,000
• C)a debit to the Owner,Capital account for $20,000
• D)a debit to the Owner,Capital account for $24,000

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Definitions:

Operating Assets

Assets employed in the day-to-day operations of a business that are expected to generate economic benefits, including both current and non-current assets.

Transfer Price

The price charged by one division of a company for products or services that it supplies to another division within the same company.

Valve Division

A specialized department or segment of a company focused on the production and distribution of valves.

Pump Division

A specialized segment within an organization focused on producing and managing pumps.