Exercise 5-7 Juan Morales Company had the following account balances at year-end: Cost of Goods Sold $63,970, Inventory $15,740, Operating Expenses $31,040, Sales Revenue $125,200, Sales Discounts $1,250, and Sales Returns and Allowances $1,670. A physical count of inventory determines that merchandise inventory on hand is $12,430. Prepare the adjusting entry necessary as a result of the physical count. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit IT SHOW LIST OF ACCOUNTS IS LINK TO TEXT Prepare closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Credit 11 I (To close accounts with credit balances) 1 TL 11 UUUUUUU UU UUUUU UU UU UUUUU UU TI (To close accounts with debit balances) (To close net income / (loss))