Question

On December 31, 2019, the Income Statement section of the worksheet for Capeletti Distributors contained the following information.

Income Statement Section	Debit			Credit
Income Summary	$	38,400		$	41,700
Sales					253,500
Sales Returns and Allowances		3,800
Sales Discounts		2,800
Interest Income					160
Purchases		134,200
Freight In		2,100
Purchases Returns and Allowances					1,900
Purchases Discounts					1,510
Rent Expense		8,400
Utilities Expense		2,910
Telephone Expense		1,520
Salaries Expense		65,900
Payroll Taxes Expense		5,250
Supplies Expense		1,680
Depreciation Expense		2,400
Interest Expense		320
Totals	$	269,680		$	298,770

Assume further that the owner of the firm is John Capeletti and that the John Capeletti, Drawing account had a balance of $26,100 on December 31, 2019.

Prepare the entries that should be made in the general journal to close the revenue, cost of goods sold, expense, and other temporary accounts.

Answer 1

Date Accounts title and explanation Debit Credit | 31st Dec. Sales Interest income Purchase discounts Purchase returns and allowance Income summary (to record the closing of revenue and other credit terms) 253.500 160 1.510 1,900 257,070 231,280 31 Dec. Income summary Sales return and allowances Sales discounts Purchase Freight In Rent expense Telephone expenses Utilities expense Salaries expense Payroll taxes expense Supplies expense Depreciation expenses Interest expense (to record the closing of expenses and other debit items) 3.800 2,800 134,200 2,100 8,400 1,520 2.910 65.900 5,250 1.680 2.400 320 31 Dec. 29.090 29,090 Income summary: JC's capital (to record the closing of income summary to owner's equity) 31st Dec. 26.100 JC's capital JC's drawings (to record the closing of drawings to owner's equity)

Working notes: 1. T account of income summary Date Particulars Amount ($) Beginning balance 38.400 Date Amount ($) 41,700 Particulars Beginning balance Balance on 31st Dec. Bal. fig. Balance on 31st Dec. 231,280 257,070 29.090