During Its First Year of Operations,Forrest Company Paid $30,000 for Direct

question 60

Multiple Choice

During its first year of operations,Forrest Company paid $30,000 for direct materials and $50,000 in wages for production workers.Lease payments,utility costs,and depreciation on factory equipment totaled $15,000.General,selling,and administrative expenses were $20,000.The average cost to produce one unit was $2.50.How many units were produced during the period?

• A) 40,000
• B) 46,000
• C) 38,000
• D) None of these.

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Definitions:

Income Summary

An account used in the closing process that aggregates all income and expenses to determine the net income or loss for the period.

Merchandise Inventory

The goods a company has available for sale to customers, considered a current asset on the balance sheet.

Adjustments

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Worksheet

An informal document used by accountants to prepare adjusting journal entries and to support the preparation of financial statements.