This problem uses both the statement of earnings (income statement) and the balance sheet of Aritzia’s February 28, 2021 financial statements.

1. Journalize Aritzia’s closing entries for the year ended February 28, 2021, up to the line Income from operations. Instead of closing to a Capital account, close to the Retained Earnings account (since Aritzia is a corporation, not a proprietorship). What was the amount closed to Retained Earnings?

2. What amounts go into the inventory value shown on the balance sheet? Why would ‘finished goods in transit’ be included in the inventory total? See Note 5 in the Aritzia financial statements included in the annual report for this detail.

3. What amounts are shown on the balance sheet for the Inventory account for February 28, 2021, and March 1, 2020?