Presented is information related to Hurley Co. for the month of January 2012. En
ID: 2346021 • Letter: P
Question
Presented is information related to Hurley Co. for the month of January 2012.Ending inventory per perpetual records $27,870
Ending inventory actually on hand 27,305
Cost of goods sold 223,940
Freight out 7,410
Insurance expense 12,340
Rent expense 22,200
Salary expense 68,640
Sales discounts 10,800
Sales returns and allowances 13,790
Sales 385,550
Instructions
(a) Prepare the necessary adjusting entry for inventory.
Description/Account Debit Credit
(b) Prepare the necessary closing entries. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Description/Account Debit Credit
(To close income statement accounts with credit balances.)
(To close income statement accounts with debit balances.)
(To close net income to capital.)
Explanation / Answer
(a) Prepare the necessary adjusting entry for inventory.
Description/Account Debit Credit
Inventory Short & Over $586
Merchandise Inventory $586
__________________________________________
(b) Prepare the necessary closing entries. (For multiple debit/credit entries, list amounts from largest to smallest e.g. 10, 5, 3, 2.)
Description/Account Debit Credit
Sales $388,540
Income Summary 388,540
(To close income statement accounts with credit balances.)
___________________________________________________
Income Summary $361,146
Cost of goods sold $222,470
Freight out $7,530
Insurance expense $12,350
Rent expense $29,230
Salary expense $64,890
Sales discounts $10,470
Sales returns and
allowances $13,620
Inventory Short & Over $586
(To close income statement accounts with debit balances.)
_______________________________________________________
Income Summary $27,394
Retained Earnings $27,394
(To close net income to capital.)
_______________________________________________________
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