Nix'It Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal

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 $ 46,800 Sales returns and allowances $ 4,700 Retained earnings $133,300 Cost of goods sold $ 110,400 Dividends 7,000 Depreciation expense 12,100 Sales 163,600 Salaries expense 4,700 Sales discounts $41,500 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 $44,750. Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.

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Journal Entries: Date Account Titles and Explanations Debit Credit Jul-31 Sales 1,63,600 Income Summary 1,63,600 (To close the revenue accounts) Jul-31 Income Summary 1,80,450 Sales discounts 4,700 Sales returns and allowances 4,700 Cost of goods sold (110,400+(46800-44750)) 1,12,450 Depreciation expense 12,100 Salaries expense 41,500 Miscellaneous expense 5,000 (To close the expense accounts) Jul-31 Retained Earnings (180,450-161,600) 16,850 Income Summary 16,850 (To close the income summary account) Jul-31 Retained Earnings 7,000 Dividends 7,000 (To close the dividends account) Journal Entry: Date Account Titles and Explanations Debit Credit Jul-31 Cost of goods sold (46,800-44,750) 2,050 Merchandise Inventory 2,050 (To record the adjusting entry for shrinkage of inventory)

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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)

Expert Solution

Archived Solution

Journal Entries:
Date	Account Titles and Explanations	Debit	Credit
Jul-31	Sales	1,63,600
	Income Summary		1,63,600
	(To close the revenue accounts)
Jul-31	Income Summary	1,80,450
	Sales discounts		4,700
	Sales returns and allowances		4,700
	Cost of goods sold (110,400+(46800-44750))		1,12,450
	Depreciation expense		12,100
	Salaries expense		41,500
	Miscellaneous expense		5,000
	(To close the expense accounts)
Jul-31	Retained Earnings (180,450-161,600)	16,850
	Income Summary		16,850
	(To close the income summary account)
Jul-31	Retained Earnings	7,000
	Dividends		7,000
	(To close the dividends account)

Journal Entry:
Date	Account Titles and Explanations	Debit	Credit
Jul-31	Cost of goods sold (46,800-44,750)	2,050
	Merchandise Inventory		2,050
	(To record the adjusting entry for shrinkage of inventory)