Explanation:
The adjusting entry for physical count is shown below:
Cost of goods sold A/c Dr $1,290
To Inventory A/c $1,290
(Being the adjusting entry for physical count is recorded)
The computation is given below:
= Year end balance of inventory account - physical inventory on hand
= $14,340 - $13,050
= $1,290
The closing entries for the following accounts are shown below:
1. Sales Revenue A/c Dr $124,430
To Income Summary $124,430
(Being revenue account closed)
2. Income summary A/c Dr $94,230
To Cost of goods sold $61,720 ($60,430 + $1,290)
To Sales Discounts $1,120
To Operating Expenses $29,560
To Sales Returns and Allowances $1,830
(Being expenses accounts are closed)
3. Income summary A/c Dr $30,200 ($124,430 - $94,230)
To Retained earning $30,200
(Being the difference is credited to retained earning)
