A Merchandiser Uses a Perpetual Inventory System

question 54

Multiple Choice

A merchandiser uses a perpetual inventory system. The beginning Capital balance of a merchandiser was $100,000. During the year, sales revenue amounted to $75,000, sales returns and allowances were $1,000, sales discounts were $3,000, cost of goods sold was $40,000, and all other expenses totaled $10,000. The total withdrawals amounted to $25,000.The last step in the closing process would include:

• A)a debit to Income Summary for $54,000.
• B)a credit to Income Summary for $75,000.
• C)a debit to Owner's Name, Capital for $21,000.
• D)a debit to Owner's Name, Capital for $25,000.

---

Definitions:

Federal Taxes

Mandatory financial charges collected by the federal government to fund public services and projects.

State Taxes

Taxes imposed by state governments on income, sales, property, and other activities within their jurisdiction.

Federal Government

The national government of a federated state, which shares sovereignty with the individual state or provincial governments.

Property Tax

A tax on the value of property, such as the value of a home.