Twix Company had the following account balances at year-end: Cost of Goods Sold $62,710; Inventory $14,890; Operating Expenses $30,640; Sales Revenue $118,720; Sales Discounts $1,260; and Sales Returns and Allowances $2,030. A physical count of inventory determines that merchandise inventory on hand is $12,790.
(a) Prepare the adjusting entry necessary as a result of the physical count.
(b) Prepare closing entries.