The Trial Balance for a Merchandiser Is as Follows

question 65

Essay

The trial balance for a merchandiser is as follows.A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand.(Assume a perpetual inventory system. )

Give journal entry to record the inventory shrinkage,and the entries to close the Sales Revenue account,the expense accounts and contra revenue accounts with a debit balance,and the the Income Summary account and the Owner,Withdrawals account.

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Definitions:

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, will begin to decrease.

Average Total Cost

The total cost of production divided by the quantity of output produced.

Economies of Scale

Enterprises achieve cost benefits from their operation size, resulting in a reduction of cost per output unit as the scale expands.

Average Variable Cost

The total variable costs divided by the quantity of output produced; it fluctuates with production volume.