Prepare the annual closing entries for Billings
Merchandisers using the partial adjusted trial balance shown below. A physical
count at yearend determined that inventory at January 31, 2016, totaled
$19,500. Assume Billings uses an Income Summary account in its closing process,
and that the income statement for the year shows net income of $102,500.
Billings Merchandisers
Inc.
Trial Balance (partial)
January 31, 2016
Debit
Credit
Inventory (2/1/15)
$23,000
Retained earnings
192,000
Dividends
4,000
Sales
405,000
Sales returns and allowances
2,500
Sales discounts
4,000
Purchases
200,000
Purchases returns and allowances
1,200
Purchase discounts
900
Freight-in
1,500
Advertising expense
12,000
Commissions expense
6,000
Rent expense
24,000
Salaries and wages expense
25,000
Insurance expense
3,200
Utilities expense
$2,900
Income tax expense
20,000
a.
Service Revenue
Income Summary
(To close revenue
account)
b.
Income Summary
94,600
Freight-In expense
1,500
Advertising expense
12,000
Commissions expense
6,000
Rent expense
24,000
Salaries and Wages
expense
25,000
Insurance expense
3,200
Utilities expense
2,900
Income Tax expense
20,000
(To close expense
account)
c.
Income Summary
Retained Earnings
(To close net income
to retained earnings)
d.
Retained Earnings
4,000
Dividends
4,000
(To close dividends to
retained earnings)
Prepare the annual closing entries for Billings
Merchandisers using the partial adjusted trial balance shown below. A physical
count at yearend determined that inventory at January 31, 2016, totaled
$19,500. Assume Billings uses an Income Summary account in its closing process,
and that the income statement for the year shows net income of $102,500.Billings Merchandisers
Inc. Trial Balance (partial)January 31, 2016Debit CreditInventory (2/1/15)$23,000 Retained earnings 192,000Dividends4,000Sales405,000Sales returns and allowances2,500Sales discounts4,000Purchases200,000Purchases returns and allowances1,200Purchase discounts900Freight-in 1,500Advertising expense12,000Commissions expense6,000Rent expense24,000Salaries and wages expense 25,000Insurance expense3,200Utilities expense$2,900 Income tax expense 20,000a.Service Revenue Income Summary (To close revenue
account)b.Income Summary 94,600 Freight-In expense1,500 Advertising expense 12,000 Commissions expense 6,000 Rent expense24,000 Salaries and Wages
expense25,000 Insurance expense3,200 Utilities expense 2,900 Income Tax expense 20,000 (To close expense
account)c. Income Summary Retained Earnings (To close net income
to retained earnings)d. Retained Earnings 4,000 Dividends 4,000 (To close dividends to
retained earnings)
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