Question

Nix’It Company’s ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix’It uses the perpetual inventory system).

Merchandise inventory	$	44,300		Sales returns and allowances	$	5,200
Retained earnings		128,300		Cost of goods sold		108,900
Dividends		7,000		Depreciation expense		11,600
Sales		161,100		Salaries expense		39,000
Sales discounts		4,200		Miscellaneous expenses		5,000

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $42,500.

Answer 1

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Nix 'It Company
Workings	Amount $
Merchandise inventory	44,300.00
Less: Physical count	42,500.00
To be adjusted to Costs of goods sold	1,800.00
Add: Costs of goods sold	108,900.00
Costs of goods sold adjusted	110,700.00
Income statement	Amount $
Sales	161,100.00
Less: Sales discounts	(4,200.00)
Less:   Sales returns and allowances	(5,200.00)
Net Sales	151,700.00
Costs of goods sold adjusted	108,900.00
Gross profit	42,800.00
Less: Operating expenses
Depreciation expense	11,600.00
Salaries expense	39,000.00
Miscellaneous expense	5,000.00
Operating expenses	55,600.00
Net Loss	(12,800.00)
Statement of Retained earnings	Amount $
Opening Balance	44,300.00
Less: Net Loss	(12,800.00)
Less: Dividends	(7,000.00)
Closing Balance	24,500.00