Question

Martinez Creations had the following account balances at year-end: Cost of Goods Sold #64,510, Inventory t14,670, Operating Expenses t32,540, Sales Revenue t126,070, Sales Discounts t1,050, and Sales Returns and Allowances t1,970. A physical count of inventory determines that merchandise inventory on hand is t12,600. Prepare the adjusting entry necessary as a result of the physical count. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Prepare closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To close accounts with credit balances) (To close accounts with debit balances) (To close net income / (loss))

Answer 1

	Journal entries
No.	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
a
(1)	Cost of Goods Sold	2,070.00
	Inventory (14,670 - 12,600)		2,070.00
	(To record adjusting entry as a result of the physical count)
b.
1	Sales Revenue	126,070.00
	Income Summary		126,070.00
	(To close accounts with credit balances)
2	Income Summary	100,070.00
	Cost of goods sold		64,510.00
	Operating Expenses		32,540.00
	Sales Returns and Allowances		1,970.00
	Sales Discounts		1,050.00
	(To close accounts with debit balances)
3	Income Summary (126,070-100,070)	26,000.00
	Owner’s, Capital		26,000.00
	(To close net income / (loss))