Marty's Merchandise Has Budgeted Sales as Follows for the Second

question 219

Multiple Choice

Marty's Merchandise has budgeted sales as follows for the second quarter of the year:
Cost of goods sold is equal to 70% of sales. The company wants to maintain a monthly ending inventory equal to 120% of the cost of goods sold for the following month. The inventory on March 31 was below this target and was only $22,000. The company is now preparing a Merchandise Purchases Budget for April, May, and June.
-The total number of units produced in July should be:

• A) 5,300 units
• B) 6,365 units
• C) 5,570 units
• D) 5,030 units

Apply the process of adjusting and closing entries for revenue, expense, and dividends accounts.

Distinguish between permanent and temporary accounts in the context of closing entries.

Analyze and interpret the effects of closing entries on retained earnings.

Determine net income or loss from an adjusted trial balance or list of transactions.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, varying according to the amount of income or profit made.

Unrealized Gain

Represents the increase in value of an investment or asset that has not yet been sold for cash.

Commercial Substance

A concept in accounting that a transaction has commercial substance if it significantly changes the economic circumstances of the entities involved.

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task or business activity.