Question

Thank you. thumbs up!

Exercise 5-08 a-b Presented below is information related to Garland Co. for the month of January 2020. $21,600 Ending inventory per perpetual records Ending inventory actually on hand Cost of goods sold Freight-out Insurance expense Rent expense Salaries and wages expense Sales discounts Sales returns and allowances Sales revenue $12,000 20,000 55,000 10,000 13,000 380,000 21,000 218,000 7,000 Prepare the necessary adjusting entry for inventory. (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 "0" for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

1) Adjusting entry

Account title and explanation	Debit	Credit
cost of goods sold (21600-21000)	600
Merchandise inventory		600

2) Closing entry

Account title and explanation	Debit	Credit
Sales revenue	380000
Income summary		380000
(To close revenue)
Income summary	335600
Sales discount		10000
Sales return and allowance		13000
Cost of goods sold		218600
Freight out		7000
Insurance expense		12000
Rent expense		20000
Salaries and wages expense		55000
(To close expense)
Income summary	44400
Retained earnings		44400
(To record net income (loss)