Question

The adjusted trial balance of Windsor Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2020: Sales Revenue $743,800, Delivery Expense $10,950, Sales Returns and Allowances $22,820, and Sales Discounts $11,170

A) Prepare the revenues section of the income statement.
B) Prepare separate closing entries for (1) sales and (2) the contra accounts to sales.

Answer 1

A) Prepare the revenues section of the income statement.

Sales Revenue                                             = $743,800

Sales Discounts                                           = ($11,170)

Sales Returns and Allowances                   = ($22,820)

Net Sales                                                      = $709,810

B) Prepare separate closing entries for (1) sales and (2) the contra accounts to sales.

(1)                                                      Dr.                        Cr.

Revenue Expense                      $743,800

Income Summary                                                   $743,800

(2)                                                      Dr.                        Cr.

Income Summary                        $33,990

Sales Discounts                                                      $11,170

Sales Returns and Allowances                              $22,820