Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,870; Inventory $18,070; Operating Expenses $32,660; Sales Revenue $123,390; Sales Discounts $1,030; and Sales Returns and Allowances $1,930. A physical count of inventory determines that merchandise inventory on hand is $12,840.

Prepare closing entries. (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 To close accounts with debit balances)

Question

Business

Josiah Chan

19 December, 03:56

Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $60,870; Inventory $18,070; Operating Expenses $32,660; Sales Revenue $123,390; Sales Discounts $1,030; and Sales Returns and Allowances $1,930. A physical count of inventory determines that merchandise inventory on hand is $12,840.

Prepare closing entries. (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 To close accounts with debit balances)

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Answers (1)

Know the Answer?

Luz · Answer 1

Under the periodic system the cost of goods sold is not recorded.

This is a perpetual inventory system.

Account Titles and Explanation Debit Credit

1 Merchandise Inventory $ 5590

Cost of goods Sold $ 5590

Excess of ending inventory (18070-12840=) $5590 adjusting entry

2 Sales $123,390

Income Summary $ 123,390

Closing entry

3 Income Summary $96490

Sales Discounts $ 1030

Sales Return and Allowances $ 1930

Cost of Goods Sold $ 60,870

Operating Expenses $ 32,660

Closing entry