E5-19 Emerson St. Paul Book Shop’s accounts at June 30, 2012, included the following

Price: $2.99

E5-19 Journalizing adjusting and closing entries, and computing gross profit

[10–15 min]

Emerson St. Paul Book Shop’s accounts at June 30, 2012, included the following

unadjusted balances:

Inventory		$5,400
Cost of goods sold		40,300
Sales revenue		85,300
Sales discounts		1,400
Sales returns and allowances		2,000

The physical count of inventory on hand on June 30, 2012, was $5,000.

Requirements

1. Journalize the adjustment for inventory shrinkage.

2. Journalize the closing entries for June 2012.

3. Compute the gross profit.