Question

Cost of Goods Sold - Year-end closing entry:

QuickBooks automatically debits cost of goods sold and credits inventory for the product cost for each sale. The inventory account is also automatically updated for the inventory purchases and purchases returns. therefore, the QuickBooks data does not include the following accounts from the SUA: A/C #30500 (Purchases) and A/C #30600 (Purchase Returns and Allowance). Waren treats purchase discounts taken and freight-in as a part of cost of goods sold, but records them in separate accounts during the accounting period. Therefore, these two accounts must be closed to A/C #30400 (Cost of Goods Sold): A/C #30700 (Purchases Discounts Taken) and A/C #30800 (Freight-In).

Before preparing the general journal entry, determine the balance in each account being closed to cost of goods sold. Determine the balance in the accounts to be closed by examining the income statement.

Question: In preparing the general journal entries, what debit and credit entries do I need to make to complete this entry. I've seen this question asked already, but in that response, I don't understand how to make the entry as I thought the debits and credits in the entry must match.

Income Statement:

Report Basis: Accrual Cash Show Filters 1:33 PM 12/15/17 Waren Sports Supply Income Statement January through December 2017 Accrual Basis Jan - Dec 17 1,590,883.00 -61,106.00 -15,405.82 825.00 1,515,196.18 1,018,428.00 - 16,554.48 24,506.44 1,026,379.96 488,816.22 30100. Sales 30200. Sales Returns and Allowances 30300 - Sales Discounts Taken 31200. Miscellaneous Revenue Total Income Cost of Goods Sold 30400 - Cost of Goods Sold 30700 - Purchases Discounts Taken 30800 . Freight-in Total COGS Gross Profit Expense 40100 - Rent Expense 40200. Advertising Expense 40300 - Office Supplies Expense 40400 Depreciation Expense 40500. Wages and Salaries Expense 40600. Payroll Tax Expense 40800 . Interest Expense 40900 - Bad Debt Expense 41000 - Other Operating Expense Total Expense Net Ordinary Income Net Income 57,600.00 22,275.00 5,664.91 35,023.64 140,663.35 11,611.24 106.85 7,430.39 29,285.75 309,661.13 179,155.09 179,155.09

Answer 1

Anonty As per data your question and according to the given Veturn and allowances and can be closed to sales account closing balance to 1514371.18 sales discounts taken by reducing the sales 30100 - Sales debit 76511.82 30200 - sales returns and allowancs credit 61106 30300 - sales discounts taken credit 15405.82 now similarly, the purchases discounts taken and the freight in can be closed to cost of Goods sold account by increasing the cost of goods sold balanco to 1026379.96 soudo cost of goods sold debit 7951.96 taken debit 16954.48 30700 - Purchases discounts 30800 - Freight in Credit Qu506.44.