question archive You have selected accounts from XYZ company pertaining to the year ended on 31/12/2019 Sales revenue $250,000 Sales returns and allowances $44,000
You have selected accounts from XYZ company pertaining to the year ended on 31/12/2019 Sales revenue $250,000 Sales returns and allowances $44,000
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You have selected accounts from XYZ company pertaining to the year ended on 31/12/2019 Sales revenue $250,000 Sales returns and allowances $44,000. Sales discounts $15,000. Cost of goods sold $144,000. Salaries and wages expense $24,000. Utilities expense $13,000. Advertising expense $11,000... Depreciation expense 18,000. Freight-out $4,000. Insurance expense $9,000. Inventory $ 44,000... Retained Earnings credit balance is $50,000 Dividends $3,000. Instruction: 1- Make the necessary closing entries for XYZ on 31/12/2019. (8 marks) 2- Find the ending balance of retained earnings after closing entries. (2 mark)
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Net sales revenue = sales revenue - sales return - sales discount
= 250,000 - 44,000 - 15,000
= 191,000
1. Closing entry:
| Description | Debit | Credit |
| Sales revenue | 191,000 | |
| Income summary | 191,000 |
| Description | Debit | Credit |
| Income summary | 223,000 | |
| Cost of goods sold | 144,000 | |
| Salary and wages | 24,000 | |
| Utilities expense | 13,000 | |
| Advertisement | 11,000 | |
| Depreciation | 18,000 | |
| Freight out | 4,000 | |
| Insurance expense | 9,000 | |
| Description | Debit | Credit |
| Retained earning | 3,000 | |
| Dividend | 3,000 |
B. Ending balance of retained earning:
net profit (loss) after all expenses = 191,000 - 223,000
= (32,000)
it means net loss of 32,000.
balance of retained earning given = 50,000
ending balance of retained earnings = 50,000 - net loss - dividend
= 50,000 - 32,000 - 3,000
= 50,000 - 35,000
= $15,000
