Question

Nix’It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix’It uses the perpetual inventory system). Merchandise inventory $ 42,300 Sales returns and allowances $ 5,600 Retained earnings 124,300 Cost of goods sold 107,700 Dividends 7,000 Depreciation expense 11,200 Sales 159,100 Salaries expense 37,000 Sales discounts 3,800 Miscellaneous expenses 5,000 A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $40,700. Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage from QS 4-9. (The solution from QS 4-9 is required to complete this question.) Solution is 1,600

• Record the entry to close the income statement accounts with credit balances

Note: Enter debits before credits.

	Date General Journal Debit Credit July 31

v

Journal entry worksheet

v

• Record the entry to close the income statement accounts with debit balances.

Note: Enter debits before credits.

	Date General Journal Debit Credit July 31

• 
  

Answer 1

Date July. 31 General Journal Sales Income Summary (To close Sales Revenue to income summery Recorded) Debit 1 Credit $ 159,100 $ 159,100 July. 31 $ 171,900 Income Summary Sales Discounts Sales returns and allowences Cost of Goods sold Depreciation Expenses Salaries expenses Miscellenious Expenses (To close expenses accounts recorded) $ 3,800 $ 5,600 $ 109,300 $ 11,200 $ 37,000 $ 5,000 Working Notes: Cost of goods Sold = $107,700+ ($42,300-$40,700) = $109,300