Valley Company\'s adjusted trial balance on August 31, 2016, its fiscal year end

Question

Valley Company's adjusted trial balance on August 31, 2016, its fiscal year end, follows S 42,200 41,080 Merchandise inventory Other (noninventory) assets Total liabilities Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Sales salaries expense Rent expense-Selling space Store supplies expense Advertising expense Office salaries expense Rent expense-Office space Office supplies expense Totals 5 24,000 17.280 4.320 8,500 225,000 2,270 13,000 73,500 32,000 8,600 1,500 13,000 29,900 3,700 450 s 270,600 270,000 On August 31, 2015, merchandise inventory was $25,600. Supplementary records of merchandising activitie Invoice cost of merchandise purchases Purchase discounts received Purchase returns and allowances Costs of transportation-in $92,300 2,700 4.400 4,900 Required: 1. Prepare closing entries as of August 31, 2016 (the perpetual inventory system is used). View transaction list Journal entry worksheet 2 Record the entry to close the income statement accounts with credit balances.

Explanation / Answer

Date General Journal Debit Credit 1 Aug. 31 Sales 225000 Income summary 225000 (To close of income statement accounts with credit balances) 2 Aug. 31 Income summary 177920 Sales discounts 2270 Sales returns and allowances 13000 Cost of goods sold 73500 Sales salaries expense 32000 Rent expense-selling space 8600 Store supplies expense 1500 Advertising expense 13000 Office salaries expense 29900 Rent expense-office space 3700 Office supplies expense 450 (To close of income statement accounts with debit balances) 3 Aug. 31 Income summary 47080 Retained earnings 47080 (To close income summary) 4 Aug. 31 Retained earnings 8500 Dividends 8500 (To close dividends)

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