Sales Revenues Were $20,000,Sales Returns and Allowances Were $300,Sales Discounts

question 108

Multiple Choice

Sales revenues were $20,000,Sales returns and allowances were $300,Sales discounts were $700,Cost of goods sold were $12,000,and all other expenses totaled $4,500.The third closing entry would include which of the following line items?

• A) Debit to Income summary of $2,500
• B) Credit to Income summary of $2,500
• C) Debit to Income summary of $19,000
• D) Debit to Income summary of $16,500

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Definitions:

Spending Variance

This refers to the difference between the budgeted amount of spending and the actual amount spent.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Variable Cost

Expenses that fluctuate directly and proportionately with changes in production volume or activity level, such as raw materials and direct labor.

Planning Budget

A financial plan that forecasts revenue, expenditures, and resources needed for a particular period.