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Ans 8. The amount of the depreciation expense adjustment for the month of august is $2650. Accumulated depreciation is the adjustment of the depreciation expense to date. So the difference between dep expense till July ($4950) and August ($7600) is $2650.
Option D
Ans 9. prepaid Insurance is a current asset as we have already paid the amount and do not receive the benefit of that expense. the insurance premium amount is generally paid on an annual or monthly basis so we classify it as a current asset (less than 1 year)
Option A
Ans 10. The cost of merchandise sold includes only the direct cost or factory cost. here we do not have direct wages or salaries.
So the formula to calculate the cost of merchandise sold is Opening Inventory + purchases - Closing Inventory.
$(5700+32000-6370)= $31330.
Option C
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