Required information

Skip to question

[The following information applies to the questions displayed below.]

NixIt Companys ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (NixIt uses the perpetual inventory system).

Merchandise inventory	$	44,800		Sales returns and allowances	$	5,100
T. Nix, Capital		129,300		Cost of goods sold		109,200
T. Nix, Withdrawals		7,000		Depreciation expense		11,700
Sales		161,600		Salaries expense		39,500
Sales discounts		4,300		Miscellaneous expenses		5,000

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $42,950.

Prepare the entry to record any inventory shrinkage.

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 to complete this question.)