Hugo Reyes Company had the following account balances at year-end: Cost of goods sold $70,040; Merchandise inventory $22,410; Operating expenses $29,790; Sales $119,827; Sales discounts $1,580; and Sales returns and allowances $1,910. A physical count of inventory determines that merchandise inventory on hand is $14,960.
Instructions
(a) Prepare the adjusting entry necessary as a result of the physical count.
b) Prepare closing entries. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)