Closing entries Account titles and explanation Debit Credit (1) Sales 31,000 Trading 31,000 [Sales revenue account balances has been transferred to trading account] (2) Trading 47,000 Purchases 45,000 Sales return 2,000 [Purchases and sales return balance transferred to trading account] (3) Profit & loss 16,000 16,000 Trading (47,000 - 31,000] [Gross loss transferred to profit & loss account] (4) Profit & Loss 13,100 Stationery 1,000 2,000 Interest expense Office expenses 10,000 100 Electricity bill Operating and non operating expenses has been transferred to profit & loss account] (5) Rent received 5,000 Profit & loss 5,000 [Rent received transferred to profit & loss account] (6) Capital 24,100 Profit & loss (16,000 + 13,100 - 5,000] 24,100 [Net loss transferred to capital account] (7) Capital 3,000 Drawings 3,000 [Balance of drawings account has been transferred and written off against capital account) Closing entries Account titles and explanation Debit Credit (1) Sales 31,000 Trading 31,000 [Sales revenue account balances has been transferred to trading account] (2) Trading 47,000 Purchases 45,000 Sales return 2,000 [Purchases and sales return balance transferred to trading account] (3) Profit & loss 16,000 16,000 Trading (47,000 - 31,000] [Gross loss transferred to profit & loss account] (4) Profit & Loss 13,100 Stationery 1,000 2,000 Interest expense Office expenses 10,000 100 Electricity bill Operating and non operating expenses has been transferred to profit & loss account] (5) Rent received 5,000 Profit & loss 5,000 [Rent received transferred to profit & loss account] (6) Capital 24,100 Profit & loss (16,000 + 13,100 - 5,000] 24,100 [Net loss transferred to capital account] (7) Capital 3,000 Drawings 3,000 [Balance of drawings account has been transferred and written off against capital account)