Supplemental Instruction Handouts
Financial Accounting Notes
Chapter 5: Perpetual Merchandise:
Closing Entries and Income Statement
1.
Step 1: Close all the credit accounts and the ending inventory balance:
Date
Dec 31
General Journal
Account Titles and Explanations
Sales
Income Summary
PR
Debit
165,245
Page ____
Credit
165,245
Step 2: Close all the debit accounts including the beginning inventory balance:
Date
Dec 31
General Journal
Account Titles and Explanations
Income Summary
Sales Returns and Allowances
Sales Discounts
Store Rent Expense
Store Supplies Expense
Store Telephone Expense
Store Wages Expense
Advertising Expense
Depreciation Expense, Store Equipment
Office Rent Expense
Office Supplies Expense
Office Telephone Expense
Office Wages Expense
Depreciation Expense, Office Equipment
Interest Expense
Cost of Goods Sold
Insurance Expense – Office
Insurance Expense – Store
PR
Debit
139,245
Page ____
Credit
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This answer key was created by Mike Reimer for the Academic Success Centre.
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2,250
750
18,000
750
345
35,000
4,500
3,600
9,000
1,250
800
15,100
800
900
40,200
3,000
3,000
Step 3: Now we close the income summary account:
Date
Dec 31
General Journal
Account Titles and Explanations
Income Summary
Meaghan Clarke, Capital
PR
Debit
26,000
Page ____
Credit
26,000
Step 4: Now we close the withdrawal account:
Date
Dec 31
General Journal
Account Titles and Explanations
Meghan Clarke, Capital
Meghan Clarke, Withdrawals
PR
Debit
25,000
Page ____
Credit
2.
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This answer key was created by Mike Reimer for the Academic Success Centre.
For more questions and Wise Guys video links please go to blogs.rrc.ca/michael
25,000
Meg’s China Shop
Income Statement
For the year ended December 31, 2013
Sales
Less: Sales Discounts
Sales Returns and Allowances
Net Sales
Cost of Goods Sold
Gross Profit
Operating Expenses:
Selling Expenses:
Store Rent Expense
Store Supplies Expense
Store Telephone Expense
Store Wages Expense
Insurance Expense - Store
Advertising Expense
Amortization Expense, Store Equipment
Total Selling Expenses
General and Administrative Expenses:
Office Rent Expense
Office Supplies Expense
Office Telephone Expense
Office Wages Expense
Insurance Expense - Office
Amortization Expense, Office Equipment
Total General and Administrative Expenses
Total Operating Expenses
Income from Operations
Other Expenses:
Interest Expense
Net Income
$165,245
$2,250
750
3000
$162,245
40,200
$122,045
$18,000
750
345
35,000
3,000
4,500
3,600
$65,195
$9,000
1,250
800
15,100
3,000
800
29,950
95,145
$26,900
900
$26,000
Academic Success Centre
www.rrc.mb.ca/asc
This answer key was created by Mike Reimer for the Academic Success Centre.
For more questions and Wise Guys video links please go to blogs.rrc.ca/michael