Question

These are the account and balances for the company as of December 31, xxx1, before the closing process of the accounting period.

Dividends	42,000
Retained Earnings	198,500
Common Stock	800,000
Building	419,600
Supplies	7,100
Inventory	194,950
Cash	174,900
Sales	980,700
Cost of Goods Sold	698,500
Salaries Expense	72,500
Utilities Expense	19,000
Insurance Expense	7,000
Advertising Expense	17,000

4. Once the temporary accounts are closed, what is the balance of the Retained Earnings account after the closing? a) $198,500

2. $980,700
3. $323,200

5. If the company prepare a Multiple Step Income Statement, what is the Gross Profit (Margin) amount?

1. Sales Revenue $980,700 – Operating Expenses $115,500 = Gross Profit $865,200
2. Sales Revenue $980,700 – Dividends $42,000 = Gross Profit $938,700
3. Sales Revenue $980,700 – Cost of Goods Sold $698,500 = Gross Profit $282,200

6. If the company prepare a Multiple Step Income Statement, what is the Net Income amount?

1. Sales Revenue $980,700 – Gross Profit $865,200 = Net Income $115,500
2. Gross Profit $282,200 – Operating Expenses $$115,500 = Net Income $116,700
3. Gross Profit $938,700 – Operating Expenses $98,500 = Net Income $840,200

7. The total amount of Operating Expenses is…

1. $115,500
2. $98,500
3. $814,000

Answer 1