False Value Hardware Began 2018 with a Credit Balance of $32,000

question 101

Multiple Choice

False Value Hardware began 2018 with a credit balance of $32,000 in the allowance for sales returns account. Sales and cash collections from customers during the year were $650,000 and $610,000, respectively. False Value estimates that 6% of all sales will be returned. During 2018, customers returned merchandise for credit of $28,000 to their accounts.
- What is the balance in the allowance for sales returns account at the end of 2018?

• A) $11,000.
• B) $39,000.
• C) $43,000.
• D) $21,000.

Evaluate the legal outcomes of non-conforming goods and the options available to buyers and sellers.

Comprehend the role and impact of negotiable and non-negotiable documents of title in goods transactions.

Identify conditions under which a title is considered void, voidable, or good.

Analyze the effects of ship-related risks on goods and the responsibilities of contracting parties.

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Definitions:

Farm Division

A specialized unit or sector within a company or organization focused on agriculture and farming activities.

Net Operating Income

The income generated by a company's activities, after deducting the costs of operations from the revenue obtained.

Variable Costing

A bookkeeping approach that incorporates solely the variable costs of production (such as direct materials, direct labor, and variable manufacturing overhead) into the cost of goods sold while omitting fixed manufacturing overhead.

Contribution Format

A method of organizing the income statement where variable expenses are deducted from sales to show the contribution margin, highlighting the variable costs and fixed costs separately.