A Merchandiser Uses a Perpetual Inventory System

question 4

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 closing balance of Capital would be:

• A)$99,000
• B)$96,000
• C)$90,000
• D)$100,000

---

Definitions:

Normal Balance

The side (debit or credit) of an account that is increased. For example, assets increase on the debit side, while liabilities increase on the credit side.

Chronological Order

The arrangement of events, numbers, or actions in the sequence that they occurred or were performed.

Debit Normal

Refers to accounts that are increased with a debit transaction and have a natural debit balance, such as assets, expenses, and losses.

Credit Normal

The usual terms or conditions under which credit is extended to customers, including payment due dates and interest rates.