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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                  $                          44,800                        Sales returns and allowances $ 5,100  

 Retained earnings                                                         129,300                     Cost of goods sold (excluding shrinkage)  109,200  

 Dividends                                                                          7,000                          Depreciation expense  11,700  

 Sales                                                                                    161,600                    Salaries expense  39,500  

 Sales discounts                                                                4,300                        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 $42,950.
  • Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.

 

 

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