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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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Appendix

Closing entries using periodic inventory system

United Rug Company is a small rug retailer owned and operated by Pat Kirwan. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger:

Chapter 6, Problem 6.39EX, Appendix Closing entries using periodic inventory system United Rug Company is a small rug retailer

Journalize the closing entries on December 31.

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 ($) Credit ($)
December 31 Merchandise Inventory (December 31) 460,000
Sales 2,220,000
Purchase Discounts 35,000
Purchase Returns and Allowances 45,000

             Merchandise Inventory

             (January 1)

375,000
             Purchases 1,760,000
             Freight In 17,000
             Salaries Expenses 375,000
             Advertising Expenses 36,000
             Depreciation Expenses 13,000
             Miscellaneous Expense 9,000
             P’s Capital 175,000 (1)
(To close the revenue and expenses accounts.)

Table (1)

Working Note:

Calculate the amount of P’s Capital.

P's Capital=[($460,000+$2,220,000+$35,000+$45,000)

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