T. Corlett Company has the following merchandise account balances: Sales Revenue

Question

T. Corlett Company has the following merchandise account balances: Sales Revenue $173,320, Sales Discounts $2,810, Purchases $125,040, and Purchases Returns and Allowances $31,410. In addition, it has a beginning inventory of $36,190 and an ending inventory of $50,650.

Prepare the entries to record the closing of these items to Income Summary using the periodic inventory system. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

(To close accounts having credit balance)

(To close accounts having debit balance)

Explanation / Answer

the following are the required closing entries:

$164,040

Account titles and explanation Debit Credit Ending inventory $50,650 Sales $173,320 Purchase returns and allowances $31,410 ...........To Income summary $255,380 (To close accounts having credit balance) Income summary

$164,040

....................To sales discounts a/c $2,810 .....................To Purchases a/c $125,040 ....................To beginning inventory a/c $36,190 (closing accounts having debit balance)

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