Answer and Explanation:
The Journal entries are shown below:-
1. Sales Dr, $161,600
To Income summary $161,600
(Being To close a temporary account with credit balances is recorded)
2. Income summary Dr, $176,650
To Sales discount $4,300
To Sales return and allowance $5,100
To Cost of good sold $111,050
To Depreciation expenses $11,700
To Salaries expenses $39,500
To Miscellaneous expenses $5,000
(Being to close a temporary account with a debit balance is recorded)
Working note:-
shrinkage based on physical count = $44,800 - $42,950
= $1,850
Cost of good sold = $109,200 + $1,850
= $111,050
