Problem 5-4A Preparing closing entries and interpreting information about discou
ID: 2594280 • Letter: P
Question
Problem 5-4A Preparing closing entries and interpreting information about discounts and returns LO C2, P3
Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.
On August 31, 2016, merchandise inventory was $25,800. Supplementary records of merchandising activities for the year ended August 31, 2017, reveal the following itemized costs.
Required:
1. Prepare closing entries as of August 31, 2017 (the perpetual inventory system is used).
Here are the options:
Accounts payable
Accounts receivable
Accumulated depreciation
Additional paid-in capital
Advertising expense
Bond premium
Bonds payable
Building
Cash
Cost of goods sold
Delivery expense
Depreciation expense
Discount on bonds payable
Goodwill
Income summary
Interest expense
Interest income
Interest payable
Interest receivable
Inventory
K. Valley, Capital
K. Valley, Withdrawals
Land
Merchandise inventory
Miscellaneous expenses
Office salaries expense
Office supplies expense
Rent expense—Office space
Rent expense—Selling space
Sales
Sales discounts
Sales returns and allowances
Sales salaries expense
Store supplies expense
Credit Debit $ 41,000 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 44,710 $ 24,600 20,200 8,100 226,600 2,290 13,000 73,800 31,200 8,900 1,800 13,000 29,600 3,500 500 $271,400 $271,400Explanation / Answer
Date General Journal Debit Credit 31-Aug Sales 226,600 Income summary 226,600 31-Aug Income summary 177,590 Sales discounts 2,290 Sales returns and allowances 13,000 cost of goods sold 73,800 sales salaries expense 31,200 Rent expense-Selling space 8,900 store supplies expense 1,800 Advertising expense 13,000 office salaries expense 29,600 rent expense-office space 3,500 office supplies expense 500 31-Aug income summary 49,010 K.Valley Capital 49,010 31-Aug K.Valley Capital 8,100 k.Valley Withdrawals 8,100