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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Normal balances of merchandise accounts

What is the normal balance of the following accounts: (a) Cost of Merchandise Sold, (b) Customer Refunds Payable, (c) Delivery Expense, (d) Estimated Returns Inventory, (e) Merchandise Inventory, (f) Sales, (g) Sales Tax Payable.

To determine

Sales is an activity of selling the merchandise inventory of a business.

To Describe: The normal balance of the following accounts.

Explanation

(a)

Cost of Merchandise Sold – Debit

Explanation:

Cost of merchandise sold is an expense account and it decreases the value of equity. Therefore, cost of merchandise sold account is debited and shows a debit balance.

(b)

Customers Refunds Payable – Credit

Explanation:

Customer refunds payable is a liability account. Therefore, customer refunds payable account is credited and shows a credit balance.

(c)

Delivery Expense – Debit

Explanation:

Delivery expense account is an expense account and it decreases the value of equity. Therefore, delivery expense account is debited and shows a debit balance.

(d)

Estimated Returns Inventory – Debit

Explanation:

Estimated returns inventory account is an expense account and it decreases the value of equity...

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