Question

Best Buy, Co., Inc’s financial statements say: “We are driven by our purpose to enrich lives...

Best Buy, Co., Inc’s financial statements say: “We are driven by our purpose to enrich lives through technology. We do that by leveraging our combination of tech and a human touch to meet our customers’ everyday needs, whether they come to us online, visit our stores or invite us into their homes. We have operations in the U.S., Canada and Mexico. We operate under various brand names including Best Buy, Best Buy Business, Best Buy Express, Best Buy Health, Best Buy Mobile, CST, Geek Squad, GreatCall, Lively, Magnolia and Pacific Kitchen and Home, bestbuy.com, greatcall.com, bestbuy.ca, and bestbuy.com.mx.”

Below are the account balances (all normal) for Best Buy, Co., Inc., as of February 1, 2020 after adjusting journal entries but before closing entries. The accounts are listed in alphabetical order. All amounts are in millions of U.S. dollars. The company's fiscal year ends on Saturday nearest the end of January each calendar year. Fiscal year 2020 ended on February 1, 2020, and fiscal year 2019 ended on February 2, 2019. There was no new investment by stockholders during fiscal 2020 (Hint: read this as no change in Common Stock).

Accounts payable

5,288

Accounts receivable

1,149

Accumulated depreciation

6,900

Cash

2,229

Common stock

26

Cost of sales

33,590

Current portion of long-term debt

674

Depreciation expense

740

Dividends

536

General and administrative expenses

7,299

Goodwill and other long-term assets

4,406

Income tax expense

452

Interest expense

64

Interest revenue

48

Long-term debt

1,257

Merchandise inventories

5,174

Other current assets

305

Other long-term liabilities

2,795

Property and equipment

9,228

Retained earnings

2,448

Sales revenue

43,638

Unearned revenue

782

Wages payable

1,316

Required:

Prepare the following for fiscal 2020 for Best Buy:

  1. Closing journal entries

Part (a):  Prepare Best Buy’s fiscal 2020 closing journal entries. Your journal entries should be in proper journal entry form (i.e., entries, rather than T accounts). There are more rows than you need. Also answer three short questions below by providing the amount and its meaning where appropriate (9.5 points).

Account Titles

Debit

Credit

Homework Answers

Answer #1

CLOSING JOURNAL ENTRIES

DR SALES 43638
CR INCOME SUMMARY 43638
(CLOSING SALES A/C)
DR INTERST REVENUE 48
CR INCOME SUMMARY 48
(CLOSING REV. ACCOUNT)
DR INCOME SUMMARY 42145
CR COST OF SALES 33590
CR DEPRECIATION EXP 740
CR GENERAL AND ADMIN EXP 7299
CR INCOMETAX EXP 452
CR INTEREST EXP 64
(CLOSING ALL EXP. A/C)
DR INCOME SUMMARY 1541
CR RETAINED EARNINGS(43638+48-42145) 1541
(TRANSFERRING TO PERMANENT ACCOUNT
DR RETAINED EARNINGS 536
CR DIVIDENDS 536
(PAYMENT OF DIVIDEND)
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