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).
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Merchandise inventory
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$44,800
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Sales returns and allowances
|
$5,100
|
|
Retained earnings
|
129,300
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Cost of goods sold (excluding shrinkage)
|
109,200
|
|
Dividends
|
7,000
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Depreciation expense
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11,700
|
|
Sales
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161,600
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Salaries expense
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39,500
|
|
Sales discounts
|
4,300
|
Miscellaneous expenses
|
5,000
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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.