The Sales Revenue of a Merchandiser Amounted to $20,000,sales Returns

question 119

Multiple Choice

The sales revenue of a merchandiser amounted to $20,000,sales returns and allowances amounted to $2,500,and sales discounts amounted to $700.The merchandiser uses a perpetual inventory system.The first entry in the closing process would include ________.

• A)a credit to Income Summary for $20,000
• B)a credit to Income Summary for $17,500
• C)a debit to Income Summary for $2,500
• D)a debit to Income Summary for $19,300

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Definitions:

Apply Overhead

The process of allocating manufacturing overhead costs to produced goods based on a predetermined rate or base.

Production Department Costs

Production department costs involve all the direct costs associated with the manufacturing process, including raw materials, direct labor, and overhead expenses specifically related to the production of goods.

Activity-Based Costing

An accounting method that assigns costs to products and services based on the activities required to produce them.

Production Departments

Sections within a manufacturing entity responsible for producing finished goods.