Exercise 5-7 Larkspur, Inc. had the following account balances at year-end: Cost of Goods Sold $62,850; Inventory $16,850; Operating Expenses $33,020; Sales Revenue $118,730; Sales Discounts $1,140; and Sales Returns and Allowances $1,700. A physical count of inventory determines that merchandise inventory on hand is $12,850. Your answer is correct 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. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Cost of Goods Sold 4000 4000 Inventory SHOW ANSWER SHOW LIST OF ACCOUNTS LINK TO TEXT Your answer is partially correct. Try again. Prepare closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) AcCount Titles and Explanation Debit Credit Sales Revenue 118730 Income Summary 118730 (To close accounts with credit balances) 85710 Income Summary 49850 Cost of Goods Sold Sales Discounts 1140 1700 Sales Returns and Allowances Operating Expenses 33020 LINK T XT Your answer is partially correct. Try again Prepare closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Credit Account Titles and Explanation Debit Sales Revenue 118730 Income Summary 118730 (To close accounts with credit balances) Income Summary 85710 Cost of Goods Sold 49850 Sales Discounts 1140 Sales Returns and Allowances 1700 Operating Expenses 33020 (To close accounts with debit balances) Income Summary 33020 Retained Earnings 33020 (To close net income (loss))