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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Closing entries

On July 31, 2016, the balances of the accounts appearing in the ledger of Serbian Interiors Company, a furniture wholesaler, are as follows:

Chapter 6, Problem 6.29EX, Closing entries On July 31, 2016, the balances of the accounts appearing in the ledger of Serbian

Prepare the July 31, 2016, closing entries for Serbian Interiors Company.

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 company’s capital account.

To Record: The closing entries of Company S.

Explanation

Record the closing entry for revenues and expenses.

Date Accounts and Explanation Post Ref Debit ($) Credit ($)
July 31 Sales1,437,000
        Administrative Expenses 440,000
        Cost of Merchandise Sold 775,000
        Interest Expense 6,000
        Selling Expenses 160,000
        Store Supplies Expense 21,500
        P’s Capital 34,500 (1)
(To close the revenue and expenses accounts.)

Table (1)

  • Sales are revenue and generally it shows credit balance. To close the sales revenue, it should be debited. Therefore, debit sales revenue account by $1,437,000.
  • Administrative expense, Cost of merchandise sold, Interest expense, Selling expense, and Store supplies 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.
  • P’s capital is a clearing account used to close revenues and expenses. Therefore, credit P’s capital account by $34,500.

Working Note:

Calculate the amount of P’s Capital.

P's Capital=[Sales(Administrative Expense+Cost of Merchandise Sold+

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