Question

Below is a selection of account balances for Mulcair Ltd. at December 31, 2013:

Sales $856,000 Sales returns $20,000 Cost of goods sold $456,000 Advertising expense $42,000 Salaries expense $112,000 Depreciation expense $29,000 Insurance expense $9,000 Administrative expense $10,000 All accounts have their normal balances.

Instructions Prepare all necessary closing entries at December 31, 2013.

Answer 1

Date	Account title and Explanation	Debit	Credit
	Sales	856000
	Sales Return		20000
	Income summary		836000
	(To record close of revenue accounts)
	Income Summary	658000
	Cost of goods sold		456000
	Advertising expense		42000
	Salaries expense		112000
	Depreciation expense		29000
	Insurance expense		9000
	Administrative expense		10000
	(To close expense account)
	Income summary	178000
	Retained Earnings		178000
	(To close balance to retained earnings account)