Required information

Use the following information for the Quick Study below.

NixIt Companys ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (NixIt uses the perpetual inventory system).

Merchandise inventory	$	37,800		Sales returns and allowances	$	6,500
Retained earnings		115,300		Cost of goods sold		105,000
Dividends		7,000		Depreciation expense		10,300
Sales		160,200		Salaries expense		32,500
Sales discounts		4,700		Miscellaneous expenses		5,000

A physical count of its July 31 year-end inventory discloses that the cost of the merchandise inventory still available is $35,900. [The following information applies to the questions displayed below.]

QS 4-10 Closing entries LO P3

Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.