QS 4-9 Closing entries LO P3 Nix’It Company’s ledger on July 31, its fiscal year

Question

QS 4-9 Closing entries LO P3 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 $ 44,800 Sales returns and allowances $ 5,100 Retained earnings 129,300 Cost of goods sold (excluding shrinkage) 109,200 Dividends 7,000 Depreciation expense 11,700 Sales 161,600 Salaries expense 39,500 Sales discounts 4,300 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 $42,950. Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.

Explanation / Answer

Nixit Company Clsoing Entries Account Title Dr $ Cr $ Income Statement      176,650.00 Sales Return & Allowances                       5,100.00 Sales Discount                       4,300.00 Cost of Goods Sold                   109,200.00 Depreciation Expense                     11,700.00 Salaries Expense                     39,500.00 Miscellaneous Expense                       5,000.00 Loss on Inventory shrinkage                         1,850.00 Income Statement                   161,600.00 Sales        161,600.00 Retained Earning           15,050.00 Income Statement                     15,050.00 Retained Earning             6,000.00 Dividends                       6,000.00

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