Problem 4-4A Preparing closing entries and interpreting information about discounts and returns LO C2, P3 Valley...

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Problem 4-4A Preparing closing entries and interpreting information about discounts and returns LO C2, P3 Valley Companys ad

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Answer 1

Answer #1

Closing Entries:

Date	Account title and Explanation	Debit	Credit
Aug.31,2018	Merchandise inventory, Aug 31,2018	$41,000
	Purchase discount	$2,600
	Purchase returns and allowances	$4,900
	Sales	$225,600
	Income Summary		$274,100
	[To close all income statement accounts with credit balances
	and Ending inventory balance]

Aug.31,2018	Income Summary	$298,450
	Merchandise inventory, Aug 31,2017		$25,000
	Purchases		$93,000
	Transportation-in		$4,800
	Sales discount		$2,250
	Sales returns and allowances		$12,500
	Cost of goods sold		$74,300
	Sales salaries expense		$31,200
	Rent expense-Selling space		$8,300
	Store supplies expense		$1,900
	Advertising expense		$12,500
	Office salaries expense		$28,900
	Rent expense-office space		$3,400
	Office supplies expense		$400
	[To close all income statement accounts with credit balances
	and Opening inventory]

Aug.31,2018	Retained earnings	$24,350
	Income summary [298,450-274,100]		$24,350
	[To close income summary account]

Aug.31,2018	Retained earnings	$8,400
	Dividends		$8,400
	[To close dividends account]

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Answer 2

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