A Merchandiser Uses a Perpetual Inventory System

question 275

Multiple Choice

A merchandiser uses a perpetual inventory system.The beginning Owner,Capital balance of the merchandiser was $99,000.During the year,Sales Revenue amounted to $75,000,Cost of Goods Sold was $32,000,and all other expenses totaled $10,000.Owner withdrawals were $21,000.There were no new capital contributions during the year.The last step in the closing process would include ________.

• A) a debit to Income Summary for $33,000
• B) a credit to Income Summary for $21,000
• C) a debit to the Owner, Capital account for $33,000
• D) a debit to the Owner, Capital account for $21,000

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Definitions:

Property Dividend

A type of dividend payment made in assets other than cash, such as stocks or physical assets.

Excess Liquidity

The situation where an organization or individual possesses more cash resources than are necessary for current operations or investments, potentially indicating underutilization of assets.

Common Shareholders

Shareholders who claim the residual profits and assets of a corporation, and usually have the exclusive power and right to elect the directors of the corporation.

Dividend

A portion of a company's earnings distributed to its shareholders, usually in the form of cash or stock.