Periodic and Perpetual Inventory System Compared

Periodic Inventory System Pe

Date Account Title and Explanation PR Debit Credit Date

Sold merchandise on account costing 8,000 for 10,000; terms were 2/10, n/30

Accounts Receivable 10,000.00

Sales 10,000.00
income on account, terms: 2/10, n/30

Customer returned merchandise costing 400 that have been sold on account for 500 (part of the 10,000 sales)

Sales Return and Allowances 500.00

Accounts Receivable 500.00
returned merchandise

Received payment from customer for merchandise sold above (cash discount taken: ( 10,000 sales minus 500 return) x 2% d

Cash 9,310.00
Sales Discount 190.00
Accounts Receivable 9,500.00
Collection

Purchased on account merchandise for resale for 6,000; terms were 2/10, n/30 (purchases recorded at invoice price

Purchases 6,000.00
Accounts Payable 6,000.00
purchase of merchandise on account

Paid 200 freight on the 6,000 purchase; terms were FOB shipping point, freight collect
Paid 200 freight on the 6,000 purchase; terms were FOB shipping point, freight collect

Freight In 200.00
Cash 200.00
transportation cost

Returned merchandise costing 300 (part of the 6,000 purchase

Accounts Payable 300.00

Purchase Return and Allowances 300.00
returned merchandise

Paid for the merchandise purchased, refer to no. 4 (cash discount taken: (6,000 purchase minus 300 return) x 2% discount =

Accounts Payable 5,700.00

Cash 5,586.00
Purchase Discount 114.00
payment for merchandise on account

To transfer the beginning inventory balance to income summary account (part of the closing entries under the periodic inven

Income Summary 250,000.00

Merchandise Inventory 250,000.00

To record the ending inventory balance (part of closing journal entries under the periodic inventory system)

Inventory 231,500.00
Income Summary 231,500.00

To adjust the ending perpetual inventory balance for the shrinkage during the year

Shrinkage already effected in no. 9 entry

ory System Compared

Perpetual Inventory System

Account Title and Explanatio PR Debit Credit

Accounts Receivable 10,000.00

Sales 10,000.00
income on account, terms: 2/10, n/30

Cost of sales 8,000.00

Merchandise Inventory 8,000.00
cost of goods sold

the 10,000 sales)

Sales Return and Allowances 500.00

Accounts Receivable 500.00
returned merchandise

Merchandise Inventory 400.00

Cost of sales 400.00

ales minus 500 return) x 2% discount = 190

Cash 9,310.00
Sales Discount 190.00
Accounts Receivable 9,500.00
Collection

orded at invoice price

Merchandise Inventory 6,000.00

Accounts Payable 6,000.00
purchase of merchandise on account
 Merchandise Inventory 200.00
Cash 200
transportation cost

Accounts Payable 300.00

Merchandise Inventory 300.00
returned merchandise

s 300 return) x 2% discount = 114

Accounts Payable 5,700.00

Cash 5,586.00
Merchandise Inventory 114.00
settlement of account

ntries under the periodic inventory system

No entry required

ntory system)

No entry required

Cost of sales 360.00

Merchandise Inventory 360.00
 A. BUYERS POINT OF VIEW
 
PROBLEM
 
Several purchase transactions of the Magaling Pharmacy are presented below. The credit terms of the business are 3/10, n/30.
 
Oct. 6 – Purchased merchandise for cash, P200,000.
Oct. 12 – Purchased merchandise on account, P700,000.
Oct. 15 – Returned merchandise purchased on account, P50,000.
Oct. 17 – Paid supplier the amount due.
Oct. 19 – Paid freight charges of P7,000 on merchandise acquired last October 6.
 

Periodic and Perpetual Inventory System Compared

Periodic Inventory System Perpetual Inventory System

Date Account Title and Explanation PR Debit Credit Date Account Title and Explanation

6-Oct Purchases 200,000.00 6-Oct Merchandise Inventory

Cash 200,000.00 Cash
payment for merchandise payment for merchandise

12-Oct Purchases 700,000.00 12-Oct Merchandise Inventory

Accounts Payable 700,000.00 Accounts Payable
purchase of merchandise on account purchase of merchandise on account

15-Oct Accounts Payable 50,000.00 15-Oct Accounts Payable

Purchase Return and Allowances 50,000.00 Merchandise Inventory

17-Oct Accounts Payable 650,000.00 17-Oct Accounts Payable

Purchase Discount 19,500.00 Merchandise Inventory
 Cash 630,500.00 Cash
Settlement of account Settlement of account

19-Oct Freight In 7,000.00 19-Oct Merchandise Inventory

Cash 7,000.00 Cash
Payment for transportation cost payment for transportation cost
al Inventory System
PR Debit Credit

200,000.00
200,000.00

700,000.00
700,000.00
e on account

50,000.00
50,000.00

650,000.00
19,500.00
 630,500.00

7,000.00
7,000.00
 B. SELLER’S POINT OF VIEW
 
PROBLEM
 
The merchandise business of ABC Co. reported the following transactions during August.
 
Aug. 3 – Cash sales, list price, P50,000 with trade discount of 8% and sales discount 5%.
Aug. 3 – Paid freight, P4,000
Aug. 6 – gave a cash refund for defective merchandise returned, P2,000
Aug. 7 – Sold merchandise to ZXY valued at P35,000 terms 2/10, 1/15, n/45.
Aug. 8 – Defective merchandise returned by ZXY, P5,000 for which a credit memo was given.
Aug. 11 – ZXY made a partial payment of P20,000.
Aug. 22 – Collected the account of ZXY in full.

Periodic and Perpetual Inventory System Compared

Periodic Inventory System Perp

Date Account Title and Explanation PR Debit Credit Date

list price 50,000.00 46,000.00

trade discount 8% 4,000.00
sales discount 5% 2,300.00

3-Aug Cash 43,700.00

Sales Discount 2,300.00
Sales 46,000.00
income

3-Aug Freight Out 4,000.00

Cash 4,000.00
transportation cost

6-Aug Sales Return and Allowances 2,000.00

Cash 2,000.00
refund to cash customer

7-Aug Accounts Receivable 35,000.00

Sales 35,000.00
income on account

8-Aug Sales Return and Allowances 5,000.00

Accounts Receivable 5,000.00
 refund to customer on account

11-Aug Cash 20,000.00

Accounts Receivable- ZXY 20,000.00
partial payment

22-Aug Cash 9,900.00

Sales Discount 100.00
Accounts Receivable 10,000.00
To record full pament of ZXY
System Compared

Perpetual Inventory System

Account Title and Explanation PR Debit Credit
cash 57700
Transactions: Use Perpetual inventory system
April 1 Memo invested 40,000 in a convenient store.
2 Bought computer equipment for 10,000
2 Bought merchandise on account from PDS Co., 16,000 terms 2/10, n/30.
3 Bought office supplies on cash, 700
4 Sold merchandise on account 15,000 FOB destination, terms 2/10, n/30. Cost of merchandise sold was 12,200.
5 Paid 200 freight on April 4 sale
6 Received credit from PDS Co., for merchandise returned, 300
11 Paid PDS Co.
13 Collected from April 4 customer
14 Bought merchandise on cash basis, 15,000
15 Salaries paid 1,500
16 Borrowed money from PNB Bank, signed a promissory note for 12,000
17 Received refund from a supplier on cash purchase on April 14, 500.
18 Bought merchandise from GABBYS, 14,200, FOB Shipping Point, terms 2/10, n/30.
20 Paid freight on April 18 purchase, 700
23 Sold merchandise for 16,400. The merchandise sold had a cost of 10,500.
26 Bought merchandise for cash, 12,300
27 Paid GABBYS on April 18 purchase, 9,000. No discount allowed for partial payment.
28 Memo get cash from the business, 2,008.
29 Made refund to cash customers for defective merchandise, 900.
30 Sold merchandise to Kieme Co. on account 13,700, n/30. Cost of merchandise sold 11,000.
30 Paid the following: Advertising 1,000; Utilities 400; Rent 3,500; Salaries 1,500.
MERCHANDISE INVENTORY END P23,386
 
 
 
 
 
Chart of Accounts
101 Cash
102 Accounts Receivable
103 Merchandise Inventory
104 Office Supplies
105 Office Equipment
201 Accounts Payable
202 Notes Payable
301 Memo, Capital
302 Memo, Drawing
401 Sales
402 Sales Return
403 Sales Discount
500 Cost of Goods Sold
501 Purchases
502 Purchase Returns and Allowances
503 Purchase Discounts
504 Freight In
601 Advertising
301 Memo, Capital
302 Memo, Drawing
401 Sales
402 Sales Return
403 Sales Discount
500 Cost of Goods Sold
501 Purchases
502 Purchase Returns and Allowances
503 Purchase Discounts
504 Freight In
601 Advertising
602 Salaries Expense
603 Utilities Expense
604 Rent Expense
605 Freight Out
701 Income Summary
Income Statement Account
Financial Position Account
401 Sales
402 Sales Return
403 Sales Discount
500 Cost of Goods Sold
501 Purchases
502 Purchase Returns and Allowances
503 Purchase Discounts
504 Freight In
601 Advertising
602 Salaries Expense
603 Utilities Expense
604 Rent Expense
605 Freight Out
 
101 Cash
102 Accounts Receivable
103 Merchandise Inventory
104 Office Supplies
105 Office Equipment
201 Accounts Payable
202 Notes Payable
301 Memo, Capital
302 Memo, Drawing
 
 
Required: Perpetual Inventory System
Purchase of merchandise
Entry: Merchandise Inventory
Accounts Payable
 
Payment of Merchandise with discount FOB destination
 
Entry: Accounts Payable
Cash
Merchandise inventory
 
Sale of Merchandise
Entry: Merchandise Inventory
Accounts Payable
 
Payment of Merchandise with discount FOB destination
 
Entry: Accounts Payable
Cash
Merchandise inventory
 
Sale of Merchandise
 
Entry: Accounts Receivable
Sales

Cost of goods sold

Merchandise Inventory
 
Collection with discount
 
Entry: Cash
Sales Discount
Accounts Receivable
 
Refund on sale
 
Entry: Sales Return
Cash
 Periodic Inventory System Posting to the Ledger
Date Account Title and Explanation PR Debit Credit Cash
April 1 Cash 101 40,000.00 Date Explanation
Memo, Capital 301 40,000.00 1-Apr initial investment
initial investment 2 Payment for computer
3 payment for supplies
2 Office Equipment 108 10,000.00 5 payment for transportation cost
Cash 101 10,000.00 11 full payment of account to PDS Co.
Payment for computer 13 Collection
14 payment for merchandise
2 Purchases 501 16,000.00 15 payment for salaries
Accounts Payable-PDS Co. 201 16,000.00 16 bank loan to PNB
terms: 2/10, n/30 17 returned merchandise
20 payment for transportation cost
3 Office Supplies 107 700.00 23 cash receipts from cash customer
Cash 101 700.00 26 payment for merchandise
payment for supplies 27 partial payment to Gabby's
28 withdrawal
4 Accounts Receivable-XYZ Co 102 15,000.00 29 refund to cash customer
Sales 401 15,000.00 30 operating expenses
terms: 2/10, n/30

5 Freight Out 605 200.00 Accounts Recievable

Cash 101 200.00 Date Explanation
payment for transportation cost 4-Apr terms: 2/10, n/30
13 Collection
6 Accounts Payable-PDS Co. 201 300.00 30 income on account, n/30
Purchase Return and allowances 502 300.00
returned merchandise
Office Supplies
11 Accounts Payable-PDS Co 201 15,700.00 Date Explanation
Purchase Discount 503 314.00 3-Apr payment for supplies
 Cash 101 15,386.00
full payment of account to PDS Co.
Office Equipment
13 Cash 101 14,700.00 Date Explanation
Sales Discount 403 300.00 2-Apr Payment for computer
Accounts Receivable 102 15,000.00
Collection

14 Purchases 501 15,000.00 Accounts Payable

Cash 101 15,000.00 Date Explanation
payment for merchandise 2-Apr terms: 2/10, n/30
6 returned merchandise
15 Salaries Expense 602 1,500.00 11 full payment of account to PDS Co.
Cash 101 1,500.00 18 FOB. Shipping point, terms: 2/10,n/30
payment for salaries 27 partial payment to Gabby's

16 Cash 101 12,000.00 Notes Payable

Notes Payable-PNB 202 12,000.00 Date Explanation
bank loan to PNB 16-Apr bank loan to PNB

17 Cash 101 500.00

Purchase Return and Allowances 502 500.00
returned merchandise Memo, Capital
Date Explanation
18 Purchases 501 14,200.00 1-Apr initial investment
Accounts Payable-Gabbys 201 14,200.00 30-Apr closing entries
FOB. Shipping point, terms: 2/10,n/30 CLOSING OF DRAWINGS

20 Freight In 504 700.00 Memo, Drawing

Cash 101 700.00 Date Explanation
payment for transportation cost 28-Apr withdrawal
30-Apr CLOSING ENTRY#4
23 Cash 101 16,400.00
Sales 401 16,400.00 Sales
cash receipts from cash customer Date Explanation
4-Apr terms: 2/10, n/30
26 Purchases 501 12,300.00 23 cash receipts from cash customer
Cash 101 12,300.00 30 income on account, n/30
payment for merchandise CLOSING ENTRIES

27 Accounts Payable-Gabby's 201 9,000.00 Sales Returns and Allowances

Cash 101 9,000.00 Date Explanation
partial payment to Gabby's 29-Apr refund to cash customer
30-Apr closing entries
28 Memo, Drawing 302 2,008.00
Cash 101 2,008.00 Sales Discount
withdrawal Date Explanation
13-Apr Collection
29 Sales Return and Allowances 402 900.00 30-Apr closing entries
Cash 101 900.00
refund to cash customer Purchases
Date Explanation
30 Accounts Receivable-Kieme Co. 102 13,700.00 2-Apr terms: 2/10, n/30
Sales 401 13,700.00 14 payment for merchandise
income on account, n/30 18 FOB. Shipping point, terms: 2/10,n/30
26 payment for merchandise
30 Advertising Expense 601 1,000.00 30-Apr closing entries
Utilities Expense 603 400.00 Purchases Return and Allowances
Rent Expense 505 3,500.00 6-Apr returned merchandise
Salaries Expense 602 1,500.00 17 returned merchandise
Cash 101 6,400.00 CLOSING ENTRIES
operating expenses Purchases Discount
217,508.00 217,508.00 11-Apr full payment of account to PDS Co.
30-Apr CLOSING ENTRIES#1
 Freight In
20-Apr payment for transportation cost
30-Apr closing entries

Advertising Expense
Date Explanation
30-Apr operating expenses
closing entries

Salaries Expense
Date Explanation
15-Apr payment for salaries
30-Apr operating expenses
closing entries

Utilities Expense
Date Explanation
30-Apr operating expenses
closing entries

Rent Expense
Date Explanation
30-Apr operating expenses
closing entries

Freight Out
Date Explanation
5-Apr payment for transportation cost
30-Apr closing entries

Income Summary
Date Explanation
30-Apr CLOSING OF REVENUE/MCDS END
CLOSING EXPENSES
CLOSE TO CAPITAL

Merchandise Inventory, End

Date Explanation
30-Apr CLSG ENTRY#1
Transactions: Use Perpetual inventory system
April 1 Memo invested 40,000 in a convenient store.
2 Bought computer equipment for 10,000
2 Bought merchandise on account from PDS Co., 16,000 terms 2/10, n/30.
3 Bought office supplies on cash, 700
4 Sold merchandise to XYZ Co. on account 15,000 FOB destination, terms 2/10, n/30. Cost of merchandise sold was 12,200.
5 Paid 200 freight on April 4 sale
6 Received credit from PDS Co., for merchandise returned, 300
11 Paid PDS Co.
13 Collected from April 4 customer
14 Bought merchandise on cash basis, 15,000
15 Salaries paid 1,500
16 Borrowed money from PNB Bank, signed a promissory note for 12,000
17 Received refund from a supplier on cash purchase on April 14, 500.
18 Bought merchandise from GABBYS, 14,200, FOB Shipping Point, terms 2/10, n/30.
20 Paid freight on April 18 purchase, 700
23 Sold merchandise for 16,400. The merchandise sold had a cost of 10,500.
26 Bought merchandise for cash, 12,300
27 Paid GABBYS on April 18 purchase, 9,000. No discount allowed for partial payment.
28 Memo get cash from the business, 2,008.
29 Made refund to cash customers for defective merchandise, 900.
30 Sold merchandise to Kieme Co. on account 13,700, n/30. Cost of merchandise sold 11,000.
30 Paid the following: Advertising 1,000; Utilities 400; Rent 3,500; Salaries 1,500.
 Memo Trading
Cash 101 Trial Balance
PR Debit Credit Debit Credit For the Month Ended April 20xx
GJ1 40,000.00 40,000.00
GJ1 10,000.00 30,000.00 Acct # Account Title Debit Credit
GJ1 700.00 29,300.00 101 Cash 9,506.00
GJ1 200.00 29,100.00 102 Accounts Receivable 13,700.00
GJ1 15,386.00 13,714.00 107 Office Supplies 700.00
GJ1 14,700.00 14,700.00 28,414.00 108 Office Equipment 10,000.00
GJ1 15,000.00 13,414.00 201 Accounts Payable 5,200.00
GJ1 1,500.00 11,914.00 202 Notes Payable 12,000.00
GJ1 12,000.00 23,914.00 301 Memo, Capital 40,000.00
GJ1 500.00 24,414.00 302 Memo, Drawing 2,008.00
GJ1 700.00 23,714.00 401 Sales 45,100.00
GJ1 16,400.00 40,114.00 402 Sales Returns and Allowances 900.00
GJ1 12,300.00 27,814.00 403 Sales Discount 300.00
GJ1 9,000.00 18,814.00 501 Purchases 57,500.00
GJ1 2,008.00 16,806.00 502 Purchases Return and Allowances 800.00
GJ1 900.00 15,906.00 503 Purchases Discount 314.00
GJ1 6,400.00 9,506.00 504 Freight In 700.00
601 Advertising Expense 1,000.00
602 Salaries Expense 3,000.00
Accounts Recievable 102 603 Utilities Expense 400.00
PR Debit Credit Debit Credit 604 Rent Expense 3,500.00
GJ1 15,000.00 15,000.00 605 Freight Out 200.00
GJ1 15,000.00 - Total 103,414.00 103,414.00
GJ1 13,700.00 13,700.00

Office Supplies 107

PR Debit Credit Debit Credit
GJ1 700 700
Office Equipment 108
PR Debit Credit Debit Credit
GJ1 10,000.00 10,000.00

Accounts Payable 201

PR Debit Credit Debit Credit
GJ1 16,000.00 16,000.00
GJ1 300 15,700.00
GJ1 15,700.00 -
GJ1 14,200.00 14,200.00
GJ1 9,000.00 5,200.00

Notes Payable 202

PR Debit Credit Debit Credit
GJ1 12,000.00 12,000.00

Memo, Capital 301

PR Debit Credit Debit Credit
GJ1 40,000.00 40,000.00
GJ7 2,100.00 42,100.00
GJ7 2,008.00 40,092.00

Memo, Drawing 302

PR Debit Credit Debit Credit
GJ1 2,008.00 2,008.00
GJ7 2,008.00 -
 Sales 401
PR Debit Credit Debit Credit
GJ1 15,000.00 15,000.00
GJ1 16,400.00 31,400.00
GJ1 13,700.00 45,100.00
GJ7 45,100.00 -

Returns and Allowances 402

PR Debit Credit Debit Credit
GJ1 900 900
GJ7 900.00 -

Sales Discount 403

PR Debit Credit Debit Credit
GJ1 300 300
GJ7 300.00 -

Purchases 501
PR Debit Credit Debit Credit
GJ1 16,000.00 16,000.00
GJ1 15,000.00 31,000.00
GJ1 14,200.00 45,200.00
GJ1 12,300.00 57,500.00
GJ7 57500 0.00
es Return and Allowances 502
GJ1 300.00 300.00
GJ1 500.00 800.00
GJ7 800 0
Purchases Discount 503
GJ1 314.00 314.00
GJ7 314 0
 Freight In 504
GJ1 700.00 700.00
GJ7 700 0

Advertising Expense 601

PR Debit Credit Debit Credit
GJ1 1,000.00 1,000.00
GJ7 1,000.00 -

Salaries Expense 602

PR Debit Credit Debit Credit
GJ1 1,500.00 1,500.00
GJ1 1,500.00 3,000.00
GJ7 3,000.00 -

Utilities Expense 603

PR Debit Credit Debit Credit
GJ1 400 400
GJ7 400.00 -

Rent Expense 604

PR Debit Credit Debit Credit
GJ1 3,500.00 3,500.00
GJ7 3,500.00 -

Freight Out 605

PR Debit Credit Debit Credit
GJ1 200 200
 GJ7 200.00 -

Income Summary 701

PR Debit Credit Debit Credit
GJ7 69,600.00 69,600.00
GJ7 67,500.00 2,100.00
GJ7 2,100.00 -

handise Inventory, End 103

PR Debit Credit Debit Credit
GJ7 23,386.00 23,386.00
 Memo Trading Memo Trading
Statement of Comprehensive Income Statement of Changes in Owner's Equity
For the Month Ended April 20xx For the Month Ended April 20xx

Sales 45,100.00 Memo, Capital 40,000.00

Less: Sales Return 900.00 Add: Net Income 2,100.00
Sales Discount 300.00 1,200.00 Less: Drawing 2,008.00
Net Sales 43,900.00 Capital end Balance 40,092.00
Cost of Goods Sold
Beginning Inventory 0.00
Purchases 57,500.00
Less: Purchase Return and Allowances 800.00
Purchase Discount 314.00 1,114.00 Estimate the cost of goods sold (COGS): Multiply the
sales (S) for the period by [1 – the expected gross profit
Net Purchases 56,386.00 % (EGP%)]. This calculation gives you COGS = S * (1-EGP
Freight In 700.00 %).
Cost of Goods Available for sale 57,086.00 77%
Less: Ending Inventory 23,386.00
Cost of Goods Sold 33,700.00 33,759.77 Estimate the ending inventory: Subtract the COGS
Gross Profit 10,200.00 from the COGAFS
Less: Expenses
Advertising Expense 1,000.00
Salaries Expense 3,000.00
Utilities Expense 400.00
Rent Expense 3,500.00
Freight Out 200.00
Total Expenses 8,100.00
Net Income 2,100.00

Memo Trading
Statement of Comprehensive Income
For the Month Ended April 20xx
Cost of Goods Sold
Beginning Inventory 0.00
Purchases 57,500.00
Less: Purchase Return and Allowances 800.00
Purchase Discount 314.00 1,114.00
Net Purchases 56,386.00
Freight In 700.00
Cost of Goods Available for sale 57,086.00
Less: Ending Inventory 23,386.00
Cost of Goods Sold 33,700.00
ng Memo Trading
Owner's Equity Statement of Financial Position
April 20xx As of April 20xx

Assets
Current Assets
Cash 9,506.00
Accounts Receivable 13,700.00
Merchandise Inventory, End 23,386.00
Office Supplies 700.00
Total Current Assets 47,292.00

GS): Multiply the

xpected gross profit
u COGS = S * (1-EGP Property, Plant, and Equipment
Office Equipment 10,000.00
Total PPE 10,000.00
Total Assets 57,292.00
ubtract the COGS
Liabilities
Accounts Payable 5,200.00
Notes Payable 12,000.00
Total Liabilities 17,200.00

Owner's Equity
Memo, Capital 40,092.00
Total Liabilities and Owner's Equity 57,292.00
 Memo Trading Closing Journal Entries
Statement of Cash Flows Date
For the Month Ended April 20xx
Dec 31
Operating Activities

Cash Inflows
Cash receipts from cash customers 16,400.00
Cash receipts from receivables 14,700.00
Refund 500.00
Total Cash Inflows 31,600.00 Dec 31

Cash Outflows
payment for supplies 700.00
payment for merchandise 51,686.00
operating epenses 7,900.00
refund to customer 900.00
payment for transportation cost 900.00
Total Cash Outflows 62,086.00
Net Cash Provided for Operating Expenses (30,486.00)

Investing Activities
Payment for computer (10,000.00) Dec 31
Net Cash Provided for Investing Activities (10,000.00)

Financing Activities
Nemo, Capital 40,000.00 Dec 31
bank loan to PNB 12,000.00
Nemo, Drawing (2,008.00)
Net Cash Provided for Financing Activities 49,992.00
Cash End Balance 9,506.00
Note!!!

Please don't forget to post your closing journal entries to you

Note!!!

Please don't forget to post your closing journal entries to you

losing Journal Entries Memo Trading
Account Title and Explanation PR Debit Credit Post Closing-Trial Balance
For the Month Ended April 20xx
Merchandise Inventory, End 23,386.00
Sales 45,100.00
Purchase Return and Allowances 800.00 Account Title
Purchase Discount 314.00 Cash
Income Summary 69,600.00 Accounts Receivable
To close income account to income summary account Merchandise Inventory, End
Office Supplies
Income Summary 67,500.00 Office Equipment
Sales Return 900.00 Accounts Payable
Sales Discount 300.00 Notes Payable
Purchases 57,500.00 Memo, Capital
Freight In 700.00 Total
Advertising Expense 1,000.00
Salaries Expense 3,000.00
Utilities Expense 400.00
Rent Expense 3,500.00
Freight Out 200.00
To close expense account to income summary account

Income Summary 2,100.00

Nemo, Capital 2,100.00
To close income account to capital account

Nemo, Capital 2,008.00

Nemo, Drawing 2,008.00
To close drawing account to capital account

Note!!!

Please don't forget to post your closing journal entries to your ledger..
Note!!!

Please don't forget to post your closing journal entries to your ledger..
emo Trading
sing-Trial Balance
nth Ended April 20xx

Debit Credit
9,506.00
13,700.00
23,386.00
700
10,000.00
5,200.00
12,000.00
40,092.00
57,292.00 57,292.00