From the following list, identify the accounts that should be closed to Tim Button, Capital at the end of the fiscal year under a perpetual inventory system:

From the following list, identify the accounts that should be closed to Tim Button, Capital at the end of the fiscal year under a perpetual inventory system: (a) Accounts Receivable, (b) Cost of Merchandise Sold, (c) Customer Refunds Payable, (d) Estimated Returns Inventory, (e) Merchandise Inventory, (f) Sales, (g) Supplies, (h) Supplies Expense, (i) Tim Button, Drawing, (j) Wages Expense.

Answer:

(b) Cost of Merchandise Sold

(f) Sales

(h) Supplies Expense

(i) Tim Button, Drawing

(j) Wages Expense

For the fiscal year, sales were $191,350,000 and the cost of merchandise sold was $114,800,000.

For the fiscal year, sales were $191,350,000 and the cost of merchandise sold was $114,800,000.

a. What was the amount of gross profit?

b. If total operating expenses were $18,250,000, could you determine net income?

c. Is Customer Refunds Payable an asset, liability, or owner’s equity account, and what is its normal balance?

d. Is Estimated Returns Inventory an asset, liability, or owner’s equity account, and what is its normal balance?

Answer:

a. Gross profit: $76,550,000 ($191,350,000 – $114,800,000)

b. No. There could be other revenue and expense items that affect the amount of net income.

c. Customer Refunds Payable is a liability account with a normal credit balance.

d. Estimated Returns Inventory is an asset account with a normal debit balance. 

What is the normal balance of the following accounts: (a) Cost of Merchandise Sold, (b) Customer Refunds Payable

What is the normal balance of the following accounts: (a) Cost of Merchandise Sold, (b)  Customer Refunds Payable, (c) Delivery Expense, (d) Estimated Returns Inventory, (e) Merchandise Inventory, (f) Sales, (g) Sales Tax Payable. 

Answer:

a. debit

b. credit

c. debit

d. debit

e. debit

f. credit

g. credit