On December 31, 2019, the Income Statement section of the worksheet for Capeletti Distributors contained the following information.

Income Statement Section   Debit      Credit     
Income Summary   $   39,200      $   42,500     
Sales               257,500     
Sales Returns and Allowances      4,200              
Sales Discounts      3,200              
Interest Income               200     
Purchases      135,000              
Freight In      2,500              
Purchases Returns and Allowances               2,300     
Purchases Discounts               1,590     
Rent Expense      8,800              
Utilities Expense      2,990              
Telephone Expense      1,600              
Salaries Expense      66,700              
Payroll Taxes Expense      5,330              
Supplies Expense      1,760              
Depreciation Expense      2,800              
Interest Expense      400              
Totals   $   274,480      $   304,090     

Assume further that the owner of the firm is John Capeletti and that the John Capeletti, Drawing account had a balance of $26,500 on December 31, 2019.

Prepare the entries that should be made in the general journal to close the revenue, cost of goods sold, expense, and other temporary accounts.

Answer rating: 100% (QA)

To close the revenue cost of goods sold expense and other temporary accounts we need to transfer their balances to the Income Summary account and then close the Income Summary account to the owners equity account Here are the closing entries 1 Close the revenue accounts Sales Interest Income textIncome Summary Credit quad 257500 textSales Debit quad 257500 textIncome Summary Credit quad 200 textInterest Income Debit quad 200 2 Close the contrarevenue accounts Sales Returns and Allowances Sales Discounts textSales Returns and Allowances Debit quad 4200 textIncome Summary Credit quad 4200 textSales Discounts Debit quad 3200 textIncome Summary Credit quad 3200 3 Close the expense accounts textRent Expense Debit quad 8800 textUtilities Expense Debit quad 2990 textTelephone Expense Debit quad 1600 textSalaries Expense Debit quad 66700 textPayroll Taxes Expense Debit quad 5330 textSupplies Expense Debit quad 1760 textDepreciation Expense Debit quad 2800 textInterest Expense Debit quad 400 textIncome Summary Credit quad 89380 4 Close the contraexpense accounts Purchases Returns and Allowances Purchases Discounts textIncome Summary Debit quad 3890 textPurchases Returns and Allowances Credit quad 2300 textPurchases Discounts Credit quad 1590 5 Close the Income Summary to John Capeletti Drawing account textIncome Summary Debit quad 39200 textJohn Capeletti Drawing Credit quad 39200 These entries will transfer the ... View the full answer