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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 entries; net income

Based on the data presented in Exercise 6-23, journalize the closing entries.

To determine

Closing entries: These refer 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 company’s capital account.

To Record: The closing entries of Company P.

Explanation

Record the closing entry for revenues and expenses.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
October 31 Sales6,410,000
        Cost of Merchandise Sold 3,800,000
        Selling Expenses 715,000
        Administrative Expenses 540,000
        Interest Expense 10,000
        J’s Capital 1,345,000 (1)
(To close the revenue and expenses accounts.)

Table (1)

Working Note:

Calculate the amount of J’s Capital.

J's Capital=[Sales(Cost of Merchandise Sold+Selling Expense+Administrative Expense+Interest Expense)]=[$6,410,000($3,800,000+

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