Preparing Closing Journal Entries The GAP Inc.\'s fiscal 2015 financial statemen
ID: 2332677 • Letter: P
Question
Preparing Closing Journal Entries The GAP Inc.'s fiscal 2015 financial statements provide the balances for the following selected accounts. E3-38. LO5 The GAP Inc. (GPS Debit Credit $ millions Net sales. . . . Operating expenses (other than COGS).... $15,797 4,196 53 551 Retained earnings (beginning of year). . 2,797 Prepare entries to close these accounts in journal entry form. Set up T-accounts for each of the accounts, and post the entries to them. After these entries are posted, what is the balance of the retained earnings account?Explanation / Answer
1. Net Sales A/c... Dr $15797
To Trading A/c $15797
2. Trading A/c... Dr 10077
To Cost of Goods sold A/c 10077
3. Trading A/c.. Dr 4196
To Operating exp 4196
4. Trading A/c.. Dr 1524
To Gross Profit 1524
5. Gross Profit Dr 1524
To Profit and Loss A/c 1524
6. Profit and Loss A/c.. Dr 53
To interest A/c 53
7. Profit and Loss A/c.... Dr 551
To Income tax 551
8. Profit and Loss A/c.. 920
To Net Profit 920
9. Net Profit A/c... Dr 920
To Retained earnings 920
Balance of Retained earnings at the end = 2797+920 = $ 3717
Dr Trading A/c. Cr
Particulars Amount($) Particulars Amount ($)
To Cost of Goods sold. 10077. By Net Sales. 15797
To Operating Expenses 4196
To Gross Sales (bal fig) 1524
Dr. Profit and Loss A/c. Cr
Particulars. Amount($) Particulars. Amount ($)
To interest. 53. By Gross Profit. 1524
To income tax. 551
To Net Profit (bal fig) 920