A Merchandiser Uses a Perpetual Inventory System

question 175

Multiple Choice

A merchandiser uses a perpetual inventory system.The beginning Retained Earnings balance of the merchandiser was $99,000.During the year,Sales Revenue amounted to $73,000,Sales Returns and Allowances were $1,400,Sales Discounts were $3,100,Cost of Goods Sold was $30,000,and all other expenses totaled $16,000.The company declared and paid $25,000 as dividends.The last step in the closing process would include ________.

• A)a debit to Income Summary for $50,500
• B)a credit to Income Summary for $73,000
• C)a debit to the Retained Earnings account for $20,500
• D)a debit to the Retained Earnings account for $25,000

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Definitions:

Processing Batches

The group of items or materials processed together through the same production steps in a batch production process.

Total Cost

The aggregate amount of all types of costs incurred in producing a good or service, including direct, indirect, fixed, and variable costs.

Overhead Cost

Expenses not directly tied to the production of goods or services, such as rent, utilities, and administrative salaries.

Activity-Based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.