The Merchandise Inventory account includes costs related to purchased goods, shipping and handling fees, transit insurance, and storage expenses.
Explanation:
Merchandise inventory consists of finished goods available for resale to consumers.
It encompasses all items that a company owns and intends to sell.
A merchandise enterprise:
- Generates net income by purchasing and selling merchandise
- Can acquire products from manufacturers to sell to retailers
- May also buy from manufacturers and sell directly to end-users
- Can operate as either a wholesaler or a retailer
Classified as a current asset, the Merchandise Inventory is vital for tracking.
The Merchandise Inventory account includes costs associated with purchases, shipping fees, preparation costs and handling expenses.
Answer:
The price is higher than marginal revenue
Explanation:
Answer: 1. On March 1, record the insurance purchase in advance. Debit Prepaid Insurance $36,000. Credit Cash $36,000. 2. On December 31, make the adjusting entry. Debit Insurance Expense $30,000. Credit Prepaid Insurance $30,000. Explanation: Mountaineer excavation preemptively acquires one year’s worth of flood insurance on March 1, totaling $36,000 ($3,000 a month). The insurance is documented as prepaid insurance: Debit Prepaid Insurance $36,000, Credit Cash $36,000. By December 31, at the conclusion of the following 10 months, an adjustment is recorded to Credit Prepaid Insurance for $30,000 ($3,000 per month for 10 months) and Debit Insurance Expense for the same amount.
