Quick Books automatically debits cost of goods sold and credits inventory for the product cost for each sale . The inventory account is also automatically updated for inventory purchases and purchases returns . Therefore , the Quick Books data does not include the following accounts from the SLIA : A / C $ 30500 ( Purchases) and A / C $ 30600 ( Purchase Returns and Allowance ) . Waren treats purchase discounts taken and freight-in as a part of cost of goods sold , but records them in Separate accounts during the accounting period . Therefore , these two accounts must be closed to A / C $ 30100 ( Cost of Goods Sold ) : A / C $ 30700 ( Purchases Discounts Taken ) and A / C $ 30800 ( Freight - In ) . Before preparing the general journal entry , determine the balance in each account being closed to cost of goods sold . Determine the balance in the accounts to be closed by examining the income statement . Federal Income Taxes Recall from the SULA that corporate income tax rates for 2013 are : 15% of the first $50 , 000 of pre-tax income , plus 25% of the next $25 , 000 , plus 36% of all pre- tax income over $75 , 000 . General ledger account numbers for the journal entry are : A / C $ 40700 ( Federal Income Tax Expense ) and A / C $ 20700 ( Federal Income* Taxes Payable ) . Show your calculation on page 72 of the Student Problems &