Journalize the closing entries that are necessary which are to close accounts with credit balances, to close accounts with debit balances, to close net income or loss, and to close drawings.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Wildhorse Store is located in midtown Madison. During the past several years, net income has been declining because of suburban shopping centers. At the end of the company’s fiscal year on November 30, 2020, the following accounts appeared in two of its
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Adjusted
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Adjusted
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Accounts Payable | $25,400 | $25,400 | Notes payable | $35,000 | $35,000 | |||||
31,000 | 31,000 | Owner’s Capital | 87,400 | 87,400 | ||||||
Accumulated Depr.—Equipment | 35,000 | 46,000 | Owner’s Drawings | 10,000 | 10,000 | |||||
Cash | 25,000 | 25,000 | Prepaid Insurance | 10,200 | 2,500 | |||||
Cost of Goods Sold | 508,000 | 508,000 | Property Tax Expense | 2,500 | ||||||
Freight-Out | 5,700 | 5,700 | Property Taxes Payable | 2,500 | ||||||
Equipment | 145,000 | 145,000 | Rent Expense | 15,000 | 15,000 | |||||
11,000 | Salaries and Wages Expense | 96,000 | 96,000 | |||||||
Insurance Expense | 7,700 | Sales Revenue | 720,000 | 720,000 | ||||||
Interest Expense | 6,000 | 6,000 | Sales Commissions Expense | 6,500 | 11,000 | |||||
Interest Revenue | 2,100 | 2,100 | Sales Commissions Payable | 4,500 | ||||||
Inventory | 30,000 | 30,000 | Sales Returns and Allowances | 8,000 | 8,000 | |||||
Utilities Expense | 8,500 | 8,500 |
Journalize the closing entries that are necessary which are to close accounts with credit balances, to close accounts with debit balances, to close net income or loss, and to close drawings.
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