Response to the following :
Refer to problem and prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage that is made to solve problem.
Problem:
Nix'It Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix'It uses the perpetual inventory system).
Merchandise inventory . . . . . . . . $ 34,800
Sales returns and allowances . . . . . . . . . . . $ 3,500
T. Nix, Capital . . . . . . . . . . . . . . . 115,300
Cost of goods sold . . . . . . . . . . . . . . . . . 102,000
T. Nix, Withdrawals . . . . . . . . . . 7,000
Depreciation expense . . . . . . . . . . . . . . . 7,300
Sales . . . . . . . . . . . . . . . . . . . . . . . 157,200
Salaries expense . . . . . . . . . . . . . . . . . . . 29,500
Sales discounts . . . . . . . . . . . . . . 1,700
Miscellaneous expenses . . . . . . . . . . . . . 2,000
A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $32,900. Prepare the entry to record any inventory shrinkage.