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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Closing the accounts of a merchandiser

From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year under a perpetual inventory system: (a) Accounts Payable, (b) Advertising Expense, (c) Cost of Merchandise Sold, (d) Merchandise Inventory, (e) Sa les, (f) Supplies, (g) Supplies Expense, (h) Valery Lavine, Drawing, (i) Wages Payable.

To determine

Closing entries: This refers to the journal entries that are recorded at the end of an each accounting period. It closes all revenue accounts earned, and all expenses account incurred during the current accounting year to the income summary account.

The following accounts are to be closed at the end of the year:

  • Revenue accounts
  • Expense accounts
  • Income Summary account
  • Dividend account

To Identify: The accounts that should be closed at the end of the fiscal year.

Explanation

The following are the four-steps of closing process for a merchandising company.

  • Close all the revenue accounts to the income summary account.
  • Close all the expense accounts to the income summary account...

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