Nix'It Company's ledger on July 31, its fiscal year-end, includes the following selected accounts that have normal balances (Nix'It uses the perpetual inventory system).
| Merchandise inventory |
$ |
41,300 |
Sales returns and allowances |
$ |
5,800 |
| Retained earnings |
|
122,300 |
Cost of goods sold (excluding shrinkage) |
|
107,100 |
| Dividends |
|
7,000 |
Depreciation expense |
|
11,000 |
| Sales |
|
158,800 |
Salaries expense |
|
36,000 |
| Sales discounts |
|
3,600 |
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 $39,800.
Prepare journal entries to close the balances in temporary revenue and expense accounts. Remember to consider the entry for shrinkage.