Valley Company$$s adjusted account balances from its general ledger on August $31,$ its fiscal year$-$end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense$$selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative.

Adjusted Account Balances Debit Credit

Merchandise inventory $($ending$)$ $ $38,000$

Other $($non$-$inventory$)$ assets $152,000$

Total liabilities $ $43,890$

Common stock $74,433$

Retained earnings $51,152$

Dividends $8,000$

Sales $259,920$

Sales discounts $3,977$

Sales returns and allowances $17,155$

Cost of goods sold $100,577$

Sales salaries expense $35,609$

Rent expense$$Selling space $12,216$

Store supplies expense $3,119$

Advertising expense $22,093$

Office salaries expense $32,490$

Rent expense$$Office space $3,119$

Office supplies expense $1,040$

Totals $ $429,395$ $ $429,395$

Beginning merchandise inventory was $$30,666.$ Supplementary records of merchandising activities for the year ended August $31$ reveal the following itemized costs.

Invoice cost of merchandise purchases $ $111,720$

Purchases discounts received $2,346$

Purchases returns and allowances $5,363$

Costs of transportation$-$in $3,900$

Problem $4-4$A $($Algo$)$ Preparing closing entries and interpreting information about discounts and returns LO C$1,$ P$3$

Required:

Prepare closing entries as of August $31($the perpetual inventory system is used$).$

$1.$ 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.

$3.$ Record the entry to close income summary.

$4.$ Record the entry to close the Dividends account.