A merchandiser reports sales revenue of $24,000 and sales discounts forfeited of $1,440.The merchandiser uses a perpetual inventory system.The first entry in the closing process would include ________.
A) a credit to Income Summary for $25,440
B) a credit to Income Summary for $24,000
C) a debit to Income Summary for $25,440
D) a debit to Income Summary for $24,000

Question

Quizplus · Accepted Answer

The first entry in the closing process involves transferring the total revenue to the Income Summary account. In this case, the total revenue includes both the sales revenue of $24,000 and the sales discounts forfeited of $1,440, totaling $25,440. Therefore, a credit to Income Summary for $25,440 is correct, as it increases the Income Summary account by the total revenue amount.

A Merchandiser Reports Sales Revenue of $24,000 and Sales Discounts