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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Closing entries; net income

Based on the data presented in Exercise 6-25, journalize the dosing entries.

To determine

Closing entries: These 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 company’s capital account.

To Record: The closing entries of Company K.

Explanation

  • Sales is a revenue and generally it shows credit balance. To close the sales revenue, it should be debited. Therefore, debit sales revenue account by $2,564,000.
  • Cost of merchandise sold, Selling expense, Administrative expense, and Interest expense accounts generally shows debit balance. To close all these accounts, it should be credited. Therefore, credit all these expense accounts with their respective amounts.
  • K’s capital is a clearing account used to close revenues and expenses. Therefore, credit K’s capital account by $538,000.

Record the closing entry for drawings.

Date Accounts and Explanation Post R...

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