Road Runner Tire Co.’s perpetual inventory records indicate that $1,498,200 of merchandise

Based on the data presented in Exercise 6-23, journalize the closing entries.



Answer:
















2014 Closing Entries
Feb. 28 Sales 2,850,000
Income Summary 2,850,000
28 Income Summary 2,375,000
Sales Discounts 25,000
Sales Returns and Allowances 90,000
Cost of Merchandise Sold 1,641,000
Selling Expenses 300,000
Administrative Expenses 290,000
Interest Expense 29,000
28 Income Summary 475,000
Lonnie Clemente, Capital 475,000
28 Lonnie Clemente, Capital 50,000
Lonnie Clemente, Drawing 50,000





Road Runner Tire Co.’s perpetual inventory records indicate that $1,498,200 of merchandise should be on hand on December 31, 2014. The physical inventory indicates that $1,483,750 of merchandise is actually on hand. Journalize the adjusting entry for the inventory shrinkage for Road Runner Tire Co. for the year ended December 31, 2014.


Answer:

Cost of Merchandise Sold 14,450
Merchandise Inventory 14,450
Inventory shrinkage ($1,498,200 – $1,483,750).