Annual closing entries for billings merchandisers

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Reference no: EM13860893

Prepare the annual closing entries for Billings Merchandisers using the partial adjusted trial balance shown below. A physical count at yearend determined that inventory at January 31, 2016, totaled $19,500. Assume Billings uses an Income Summary account in its closing process, and that the income statement for the year shows net income of $102,500.

Billings Merchandisers Inc.

Trial Balance (partial)

January 31, 2016


Debit

Credit

Inventory (2/1/15)

$23,000


Retained earnings


192,000

Dividends

4,000


Sales


405,000

Sales returns and allowances

2,500


Sales discounts

4,000


Purchases

200,000


Purchases returns and allowances


1,200

Purchase discounts


900

Freight-in

1,500


Advertising expense

12,000


Commissions expense

6,000


Rent expense

24,000


Salaries and wages expense

25,000


Insurance expense

3,200


Utilities expense

$2,900


Income tax expense

20,000


a.

Service Revenue




  Income Summary




    (To close revenue account)







b.

Income Summary

94,600



   Freight-In expense


1,500


   Advertising expense


12,000


   Commissions expense


6,000


   Rent expense


24,000


   Salaries and Wages expense


25,000


   Insurance expense


3,200


   Utilities expense


2,900


   Income Tax expense


20,000


    (To close expense account)







c.

Income Summary




   Retained Earnings




    (To close net income to retained earnings)







d.

Retained Earnings

4,000



   Dividends


4,000


    (To close dividends to retained earnings)



Reference no: EM13860893

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