Prepare closing journal entries for Armour Company for the year ended December 31. Data for the closing entries are as follows:

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Prepare closing journal entries for Armour Company for the year ended December 31. Data for the closing entries are as follows:

Prepare closing journal entries for Armour Company for the year ended December 31. Data for the closing entries are as follows:
Factory overhead, debit and credit balance $186,250
Sales for the year 930,600
Interest revenue 920
Cost of goods sold 710,500
Salaries expense 98,100
Office supplies expense 3,500
Depreciation expense—office equipment 6,130
Utilities expense—office 7,460
Bad debt expense 2,275
Advertising expense 9,250
Interest expense 8,300
Income tax expense 41,350

Answer & Explanation (1)

Explanation
The general journal is the book where entries are initially made relating to financial transactions entered into by the company.

The first journal entry is a debit to income summary and a credit to factory overhead and its subsidiary ledgers of $186,250 to transfer the debit balance to income summary and close the subsidiary factory overhead accounts.

The second journal entry is a debit to factory overhead and a credit to income summary of $186,250 to transfer the credit balance to income summary and close the factory overhead account.

The third journal entry is a debit to sales of $930,600 and to interest revenue of $920, and a credit to income summary of $931,520 to transfer the credit balance to income summary and close the revenue accounts.

The fourth journal entry is a debit to income summary of $886,865, and a credit to cost of goods sold of $710,500, salaries expense of $98,100, office supplies expense of $3,500, depreciation expense-office equipment of $6,130, utilities expense-office of $7,460, bad debts expense of $2,275, advertising expense of $9,250, interest expense of $8,300 and income tax expense of $41,350 to transfer the debit balance to income summary and close the remaining expense accounts.

The fifth journal entry is a debit to income summary, and a credit to retained earnings of $44,655 for the balance of income summary transferred and closed to retained earnings.

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