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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$41,800
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Sales returns and allowances
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$5,700
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Retained earnings
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123,300
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Cost of goods sold (excluding shrinkage)
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107,400
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Dividends
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7,000
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Depreciation expense
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11,100
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Sales
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158,600
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Salaries expense
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36,500
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Sales discounts
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3,700
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Miscellaneous expenses
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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 $40,250.
Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.