Question

A merchandiser has sales discounts forfeited of​ $600, cost of goods sold of​ $13,000, and other expenses of​ $4,100. The merchandiser uses a perpetural inventory system. The second entry in the closing process would include​ __________.

Answer 1

In a perpetual inventory system, the second entry of the closing process typically transfers expense account balances to the income summary account. For the merchandiser, this would debit cost of goods sold and other expenses, but sales discounts forfeited usually count as revenue, not an expense.

Step-by-step explanation:

The student is asking about the closing process in accounting, specifically within a perpetual inventory system. In this system, when closing the books at the end of an accounting period, the second entry typically involves the transfer of expense account balances to the income summary account. Given that the merchandiser has sales discounts forfeited of $600, cost of goods sold of $13,000, and other expenses of $4,100, the second entry would debit these expenses and credit the income summary with the total. However, sales discounts forfeited are typically considered a revenue item, not an expense, because they represent amounts that were expected to be reduced from the selling price but were ultimately not given as a discount to the customer.

Answer 2

Given that,

Sales discount forfeited = $600

Cost of goods sold = $13,000

Other expenses = $4,100

Expenses accounts:

= Cost of goods sold + Other expenses

= $13,000 + $4,100

= $17,100

Therefore, the second entry in the closing process is as follows:

Income summary A/c Dr. $17,100

To Cost of goods sold $13,000

To other expenses $4,100

(To record the closing entry)