I am confused as to how to close merchandise inventory account. The company does

Question

I am confused as to how to close merchandise inventory account. The company does not use a cost of good sold account therefore I have to close all of the accounts of cogs too.

These are the accounts...

closing entry to debit income summary account

Merchandise inventory

BB. 88,829

EB. 71,992

Purchases 1000

Purchases returns  500

Purchase discounts 100

how do I close these accounts. what do i debit and what do I credit ?

Then it says closing entry to credit income summary account and it gives me merchandise inventory again. Do i debit or credit and this option? and for what amount?

Explanation / Answer

THE LAST ENTRY IS NOT POSSIBLE AS SALES INFORMATION IS NOT PROVIDED

PARTICULARS DEBIT CREDIT Profit-Loss A/C 1000     To Purchase A/C 1000 [Recording Prchases.] Purchase Return A/C 500     To Profit-Loss A/C 500 [Recording Purchase Return.] Purchase Discount A/C 100     To Profit-Loss A/C 100 [Recording Purchase Discount.] Profit-Loss A/C 88829     To Opening Inventory A/C 88829 [Recording Opening Inventory.] Purchase Return A/C 71992     To Profit-Loss A/C 71992 [Recording Closing Inventory.]

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.