Nix'It Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix'It uses the perpetual inventory system).

Merchandise inventory$41,800Sales returns and allowances$5,700T. Nix, Capital123,300Cost of goods sold107,400T. Nix, Withdrawals7,000Depreciation expense11,100Sales158,600Salaries expense36,500Sales discounts3,700Miscellaneous expenses5,000

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $40,250.

QS 5-9 Accounting for shrinkage-perpetual system LO P3

1.Prepare the entry to record any inventory shrinkage.

QS 5-10 Closing entries LO P3

Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage from QS 5-9.(The solution from QS 5-9 is required

1. Record the entry to close the income statement accounts with credit balances
2. Record the entry to close the income statement accounts with debit balances.