Juan Morales Company had the following account balances at year-end:.
Cost of Goods Sold $60,870;
Inventory $18,070;
Operating Expenses $32,660;
Sales Revenue $123,390;
Sales Discounts $1,030;
Sales Returns and Allowances $1,930.
A physical count of inventory determines that merchandise inventory on hand is $12,840.
Prepare closing entries.
(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Explanation:

The closing entry for the following accounts are shown below:

1. Sales Revenue A/c Dr $123,390

                  To Income Summary $123,390

(Being revenue account closed)

2. Income summary A/c Dr $96,490

          To Sales Discounts $1,030

          To Sales Returns and Allowances $1,930

          To Cost of Goods Sold $60,870;

          To Operating Expenses $32,660

(Being expenses accounts are closed)

3. Income summary A/c Dr $26,900         ($123,390 - $96,490)

              To Retained earning $26,900

(Being the difference is credited to retained earning)

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