A Merchandiser Uses a Perpetual Inventory System

question 29

Multiple Choice

A merchandiser uses a perpetual inventory system.The beginning Retained Earnings balance of the merchandiser was $110,000.During the year,Sales Revenue amounted to $90,000,Cost of Goods Sold was $40,000,and all other expenses totaled $12,000.The company declared and paid $27,000 as dividends.The ending balance of Retained Earnings would be ________.

• A)$148,000
• B)$121,000
• C)$175,000
• D)$110,000

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Definitions:

Ordinary Annuity

A financial product resulting in payments of a fixed amount received or paid at the end of period intervals.

Compounded Monthly

The process of adding interest to the principal sum of a loan or deposit, or in other words, interest on interest, with this process happening every month.

Compounded Monthly

A method of calculating interest where the accrued interest is added to the principal each month before the next interest calculation.

Compounded Quarterly

The technique of determining interest by taking into account the original principal sum and the interest that has accrued in earlier cycles, with this process being carried out every three months.