Queen Mattresses,Inc If Queen Mattresses,Inc $\begin{array}{lcc}\text { Sales } & 3,800 & \\\quad \text { Cost of Goods Sold } & &3,800 & \\\end{array}$

question 68

Multiple Choice

Queen Mattresses,Inc.had the following transactions occur during May 20X3.Assume there is no beginning inventory. $\begin{array}{ll}\text { May } 2 & \text { Inventory was purchased on account for } \$ 5,000 \text {, terms } 2 / 10, \text { n } / 30 . \\\text { May } 3 & \text { Inventory costing } \$ 1,000 \text { was returned. } \\\text { May } 9 & \text { Paid for the inventory. } \\\text { May } 15 & \text { Inventory costing } \$ 2,200 \text { was sold on account for } \$ 3,800, \text { terms } 3 / 10,n / 45 \text {. } \\\text { May } 31 & \text { Closing entries are prepared for the month-end financial statements. }\end{array}$ If Queen Mattresses,Inc.were using a periodic inventory system,what is the journal entry to close sales on May 31?

• A)\(\begin{array}{lcc}
• \text { Sales } & 3,800 & \\
• \quad \text { Cost of Goods Sold } & &3,800 & \\
• \end{array}\)
• B) \(\begin{array}{lccc}
• \text { Cost of Goods Sold } & 3,800 \\
• \quad \text { Sales } & &3,800 & \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Income Summary } & 3,800 \\
• \quad \text { Sales } && 3,800 & \\
• \end{array}\)
• D) \(\begin{array}{lccc}
• \text { Sales } & 3,800\\
• \text { Income Summary } && 3,800 \\
• \end{array}\)
• E)No entry is necessary on a monthly basis.

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Definitions:

Vertical Analysis

A method in financial statement analysis where each line item is listed as a percentage of a base figure within the statement, allowing for the assessment of relative sizes and proportional changes over time.

Total Assets

The sum of all financial and physical resources owned by a business.

Vertical Analysis

A financial statement analysis method where each line item is listed as a percentage of a base figure within the statement, facilitating comparisons.

Current Liabilities

Current liabilities are financial obligations a company owes and is expected to pay within a year.