Question

The trial balance for a merchandiser, before the journal entries below, is as follows. A physical...

  1. The trial balance for a merchandiser, before the journal entries below, is as follows. A physical count of inventory at the end of the accounting year reveals $28,000 of inventory on hand. (Assume a perpetual inventory system.)

Debit

Credit

cash

$12,600

accounts Receivable

2400

re aid Rent

800

merchandise Inventory

30,000

accounts Payable

42000

Salaries Payable

1,000

Notes Pa able

800

yung Capital

13,800

yung , Withdrawals

1,000

Sales Revenue

96,000

cost of Goods Sold

23,000

deliver Expense

2,000

Salaries Expense

21,000

Rent Expense

14,000

selling Expense

8,500

u lies Expense

500

tOtal

1,15,800

1,15,800

Prepare the journal entry to record the inventory shrinkage and prepare all closing entries

Homework Answers

Answer #1

Inventory shrinkage and closing entries:

Account title and Explanation Debit Credit
Cost of goods sold* $2,000
Inventory $2,000
[To record inventory shrinkage]
Sales revenue $96,000
Income summary $96,000
[To close revenue accounts]
Income summary $71,000
Cost of goods sold [23000+2000shrinkage] $25,000
Delivery expense $2,000
Salaries expense $21,000
Rent expense $14,000
Selling expense $8,500
Utilities expense $500
[To close expenses accounts]
Income summary [96000-71000] $25,000
Yung, Capital $25,000
[To close income summary account]
Yung, capital $1,000
Yung, withdrawals $1,000
[To close withdrawals account]

*Inventory shrinkage = Inventory as per books - Physical count = $30,000 -$28,000 = $2,000

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