Question

Use the following adjusted Trial Balance to answer questions 46-49 FASHION CENTRE LTD. Adjusted Trial Balance November 30, 2015 Credit Debit $ 22,000 30,600 25,000 950 1.200 37.000 26.800 Cash.. Accounts receivable Merchandise inventory.. Supplies................ Prepaid insurance .................... Long-term investments.................. Equipment ............. Accumulated depreciation equipment. Accounts payable... Salaries payable............ Interest payable ... Income tax payable ................... Unearned revenue............ Bank loan payable (matures 2018).... Common shares....... Retained earnings Dividends ................. Sales ................. Interest revenue ...................... Sales discounts ....................... Sales returns and allowances. Cost of goods sold.... Salaries expense Rent expense. Depreciation expense ........ Supplies expense. Insurance expense .. Interest expense......... Advertising expense..... Income tax expense. Totals................ $ 16.080 34,400 1.210 175 1,100 600 35,000 16.400 25.000 10,000 250,900 5,000 4.520 4.600 159.500 33,810 13,850 5,360 700 600 4.175 2,100 3.100 $385.865 $385.865

Answer 1

46)

Both the options A & D are correct.

Supporting explanations:

Sales returns and allowances and discounts are deducted from the sales and the result is called Net Sales where cost of goods sold is deducted from the net sales in order to result the gross profit.

In the multi step income statement, the deduction of sales returns and discounts, cost of goods sold are deducted separately using multiple columns under separate headings.

Options A & D are shown correctly and they both are same but other options of B & C are wrong because interest revenue is not part of gross profit as it will be added after the gross profit.