Valley Company\'s adjusted trial balance on August 31, 2017, its fiscal year-end

Question

Valley Company's adjusted trial balance on August 31, 2017, its fiscal year-end, follows. Debit $ 40,600 Credit Merchandise inventory Other (noninventory) assets Total liabilities K. Valley, Capital K. Valley, Withdrawals 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 44,670 $ 24,900 21,800 8,300 225,300 2,280 12,500 75,600 32,000 8,900 1,600 12,500 29,100 3,600 350 $272,000 $272,000 On August 31, 2016, merchandise inventory was $25,700. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs Invoice cost of merchandise purchases Purchases discounts received Purchases returns and allowances Costs of transportation-in $93,000 2,200 4,900 4,600

Explanation / Answer

(a) Entry to close income statement accounts with credit balances Date Account title Debit credit Aug.31, 2017 Sales 225300 Income summary 225300 (b) Entry to close income statement accounts with debit balances Date Account title Debit credit Aug.31, 2017 Income summary 178430 Sales discounts 2280 Sales returns and allowances 12500 Cost of goods sold 75600 Sales salaries expense 32000 Rent expense - selling space 8900 Stores supplies expense 1600 Advertising expense 12500 Office salaries expense 29100 Rent expense - office space 3600 Office supplies expense 350 (c) Entry to close income summary Date Account title Debit credit Aug.31, 2017 Income summary 46870 K.Valley, Capital 46870 (d) Entry to close the withdrawals account Date Account title Debit credit Aug.31, 2017 K.Valley , Capital 8300 K.Valley , Withdrawals 8300

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