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 $ 37,800 Sales returns and allowances $ 6,500 Retained earnings 115,300 Cost of goods sold 105,000 Dividends 7,000 Depreciation expense 10,300 Sales 160,200 Salaries expense 32,500 Sales discounts 4,700 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 $35,900. Prepare journal entries to close the balances in temporary revenue and expense accounts. 1. Record the entry to close the income statement accounts with credit balances. 2. Record the entry to close the income statement accounts with debit balances.
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 $ 37,800 Sales returns and allowances $ 6,500 Retained earnings 115,300 Cost of goods sold 105,000 Dividends 7,000 Depreciation expense 10,300 Sales 160,200 Salaries expense 32,500 Sales discounts 4,700 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 $35,900. Prepare journal entries to close the balances in temporary revenue and expense accounts. 1. Record the entry to close the income statement accounts with credit balances. 2. Record the entry to close the income statement accounts with debit balances.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | $ | 37,800 | Sales returns and allowances | $ | 6,500 | |
| 115,300 | Cost of goods sold | 105,000 | ||||
| Dividends | 7,000 | 10,300 | ||||
| Sales | 160,200 | Salaries expense | 32,500 | |||
| Sales discounts | 4,700 | 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 $35,900.
Prepare journal entries to close the balances in temporary revenue and expense accounts.
1. Record the entry to close the income statement accounts with credit balances.
2. Record the entry to close the income statement accounts with debit balances.
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