Question 2 - Closing Entries - Merchandising Business - 8 Marks

The following information is taken from the General Ledger of Bens BMX Bikes at September 30, 2014.

Accounts payable....................................... ... $ 3,900

Accounts receivable................................... ....... 2,150

B. Toews, capital........................................ ....... 6,920

B. Toews, drawings.................................... ....... 5,000

Cash........................................................... ....... 1,180

Cost of goods sold...................................... ..... 45,800

Freight-out expense................................... ....... 1,000

Insurance expense..................................... .......... 720

Merchandise inventory............................... ....... 5,800

Rent expense............................................. ....... 4,800

Salaries expense........................................ ..... 12,620

Sales revenue............................................ ..... 68,500

Sales returns and allowances.................... .......... 250

A physical count of the inventory indicates that the actual amount on hand is $5,450. Bens uses the perpetual inventory system.

Instructions

Given the adjusting entry below, prepare the closing entries.

Sep 30 Cost of Goods Sold ($5,800 - $5,450).................................... 350

Merchandise Inventory.................................................... 350