Presented is information related to Rogers Co. for the month of January 2010. In

Question

Presented is information related to Rogers Co. for the month of January 2010.

Instructions

(a) Prepare the necessary adjusting entry for inventory.

(b) Prepare the necessary closing entries. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)

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Ending inventory per perpetual records $22,760 Ending inventory actually on hand 22,236 Cost of goods sold 218,550 Freight out 7,330 Insurance expense 12,400 Rent expense 23,360 Salary expense 70,720 Sales discounts 10,400 Sales returns and allowances 14,030 Sales 399,860

Explanation / Answer

a) Prepare the necessary adjusting entry for inventory
Dr COGS - Inventory shrinkage 600
Cr Inventory 600

(b) Prepare the necessary closing entries
Dr Sales 350,000
Cr Income summary 327,000
Cr Sales returns and allowances 13,000
Cr Sales discounts 10,000
to close net sales to income summary

Dr Income summary 318,600
Cr Cost of goods sold 218,600
Cr Salary expense 61,000
Cr Rent expense 20,000
Cr Insurance expense 12,000
Cr Freight out 7,000
to close costs and expenses to income summary
(you can also close sales discounts and sales returns here, but if you do that, you don't get to see the net sales amount)

Dr Income summary 8,400
Cr Retained earnings 8,400
to close net income to retained earnings

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