20) 20) Prior to recording adjusting entries, the Office Supplies account had a $359 debit balance. A physical count of the supplies showed $105 of unused supplies available. The required adjusting entry is: A) Debit Office Supplies Expense $105 and credit Office Supplies $105. B) Debit Office Supplies $254 and credit Office Supplies Expense $254. C) Debit Office Supplies Expense $254 and credit Office Supplies $254. D) Debit Office Supplies $105 and credit Supplies Expense $254. E) Debit Office Supplies $105 and credit Office Supplies Expense $105. 21) __ 21) The following information is available for Brendon Company before closing the accounts. What will be the amount in the Income Summary account that should be closed to Retained earnings? Retained earnings Dividends Fees earned Depreciation Expense Equipment Wages expense Interest expense Insurance expense Rent expense $ 112,000 32,000 187,000 12,000 71,400 3,300 11,700 24,200 A) S43,000. B) $80,000. C) $42,400. D) $64,400. E) $32,400. 22) 22) The Income Summary account is used to: A) Replace the Retained earnings account in some businesses. B) Adjust and update asset and liability accounts. C) Replace the income statement under certain circumstances. D) Close the revenue and expense accounts. E) Determine the appropriate dividend amount. 23) A trade discount is: A) A reduction in price for prompt payment. B) Also called a rebate. C) A term used by a seller to describe a cash discount granted to customers for prompt payment. D) A reduction in selling price below the list price. E) A term used by a purchaser to describe a cash discount given to customers for prompt payment 24) 24) Mega Skateboard Supplier had net sales of $2.8 million, its cost of goods sold was $1.6 million, and its net income was $0.9 million. Its gross margin ratio equals: A) 57%. B) 43%. C) 32% D) 175%. E) 56%. 25) 25) On March 12, Klein Company sold merchandise in the amount of $7,800 to Babson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Klein uses the perpetual inventory system and the net method of accounting for sales. On March 15, Babson returns some of the merchandise, which is not defective. The selling price of the returned merchandise is $600 and the cost of the merchandise returned is $350. The entry or entries that Klein must make on March 15 is (are): A) Sales returns and allowances 350 Accounts receivable 1350 B) 588 Sales returns and allowances Accounts receivable Merchandise inventory Cost of goods sold 17 350 C) 600 Accounts receivable Sales returns and allowances D) 600 Accounts receivable Sales returns and allowances Cost of Goods Sold Merchandise inventory 350 $88 Sales returns and allowances Accounts receivable Merchandise inventory Cost of goods sold 1343