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 $37,600 $40,900
Sales 249,500
Sales Returns and Allowances 3,400
Sales Discounts 2,400
Interest Income 120
Purchases 133,400
Freight In 1,700
Purchases Returns and Allowances 1,500
Purchases Discounts 1,430
Rent Expense 8,000
Utilities Expense 2,830
Telephone Expense 1,440
Salaries Expense 65,100
Payroll Taxes Expense 5,170
Supplies Expense 1,600
Depreciation Expense 2,000
Interest Expense 240
Totals $264,880 $293,450

Assume further that the owner of the firm is John Capeletti and that the John Capeletti, Drawing account had a balance of $25,700 on December 31, 2019.
Required:
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

Step-by-step explanation:

The closing journal entries are as follows

1. Sales $249,500

Interest Income $120

Purchases Returns and Allowances $1,500

Purchases Discounts $1,430

To Income Summary $252,550

(Being revenue account closed)

2. Income summary A/c Dr $227,280

To Sales Returns and Allowances $3,400

To Sales Discounts $2,400

To Purchases $133,400

To Freight In $1,700

To Rent Expense $8,000

To Utilities Expense $2,830

To Telephone Expense $1,440

To Salaries Expense $65,100

To Payroll Taxes Expense $5,170

To Supplies Expense $1,600

To Depreciation Expense $2,000

To Interest Expense $240

(Being expenses accounts are closed)

3. Income summary A/c Dr $28,570

To John Capeletti, Capital $28,570

(Being the net income is closed)

The calculation is shown below:

= $40,900 + $252,550 - $227,280 - $37,600

= $28,570

4. John Capeletti, Capital $25,700

To John Capeletti, Drawings $25,700

(Being drawing account is closed)