Question

Valley Company's adjusted trial balance on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense-selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative. Credit Debit $ 39,500 62,380 $ 25,800 16,800 21,000 8,300 226,300 Merchandise inventory (ending) Other (noninventory) assets Total liabilities Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense Office salaries expense Rent expense-office space Office supplies expense Totals 2,220 12,000 76,500 31,700 8,900 1,500 13,000 29,600 3,800 500 $289,900 $289,900 Beginning merchandise inventory was $25,600. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in $92,900 2,500 4,500 4,500 Required: Prepare closing entries as of August 31 (the perpetual inventory system is used).

Answer 1

		Debit	Credit
Aug 31	Sales	226300
	Income Summary		226300
Aug 31	Income Summary	179720
	Sales discounts		2220
	Sales returns and allowances		12000
	Cost of goods sold		76500
	Sales salaries expense		31700
	Rent expense—Selling space		8900
	Store supplies expense		1500
	Advertising expense		13000
	Office salaries expense		29600
	Rent expense—Office space		3800
	Office supplies expense		500
Aug 31	Income Summary	46580		=226300-179720
	Retained earnings		46580
Aug 31	Retained earnings	8300
	Dividends		8300