Question

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Exercise 5-07 a-b Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,000; Inventory $15,000; Operating Expenses $29,000; Sales Revenue $115,000; Sales Discounts $1,200; and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $13,900. 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 for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

Answer
Explanation	Debit	Credit
a
Cost of Goods Sold	$          1,100		15000-13900
Inventory		$          1,100
b
Sales Revenue	$      115,000
Income Summary		$      115,000
(To close accounts with credit balances)
Income Summary	$        93,000
Cost of Goods Sold		$        61,100	60000+1100
Operating Expenses		$        29,000
Sales Discounts		$          1,200
Sales Returns and Allowances		$          1,700
(To close accounts with debit balances)
Income Summary	$        22,000		115000-93000
Retained Earnings		$        22,000
(To close net income / (loss))