Question

On July 31, 2019, the balances of the accounts appearing in the ledger of Serbian Interiors Company, a furniture wholesaler, are as follows: Accumulated Depreciation—Building $365,000 Peter Bronsky, Capital $530,000 Administrative Expenses 440,000 Peter Bronsky, Drawing 15,000 Building 810,000 Sales 1,437,000 Cash 78,000 Sales Tax Payable 4,500 Cost of Merchandise Sold 775,000 Selling Expenses 160,000 Interest Expense 6,000 Store Supplies 16,000 Merchandise Inventory 115,000 Store Supplies Expense 21,500 Notes Payable 100,000 Prepare the July 31, 2019, closing entries for Serbian Interiors Company in the order as presented in the chapter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Serbian Interiors Company

Closing entries on July 31, 2019

Debit ($) Credit ($)

(1) Sales 1,437,000

Income Summary (A) 1,437,000

Closing the revenue account

(2) Income Summary (B) 1,402,500

Cost of Merchandise sold 775,000

Administrative Expenses 440,000

Selling Expenses 160,000

Interest Expense 6,000

Store Supplies Expense 21,500

Closing expense accounts

(3) Income Summary (A - B) 34,500

Peter Bronsky, Capital 34,500

Closing the net income account

(4) Peter Bronsky, Capital 15,000

Peter Bronsky, Drawings 15,000

Closing the drawings account