State the steps of Merchandise inventory

1) TRANSFER THE BEGINNING INVENTORY FIGURE

Debit INCOME SUMMARY for beginning inventory amount.

Credit MERCHANDISE INVENTORY for beginning inventory amount.

2) RECORD THE ENDING INVENTORY

Debit MERCHANDISE INVENTORY for ending inventory amount.

Credit INCOME SUMMARY for ending inventory amount.

This is preferred so that both inventory amounts show on Income Statement.

3) ADJUSTMENT FOR STORE SUPPLIES USED

Debit STORE SUPPLIES EXPENSE for the amount USED.

Credit STORE SUPPLIES

4) ADJUSTMENT FOR OFFICE SUPPLIES USED

Debit OFFICE SUPPLIES EXPENSE for the amount USED.

Credit OFFICE SUPPLIES.

5) ADJUSTMENT FOR INSURANCE EXPIRED

Debit INSURANCE EXPENSE for the amount of insurance that has expired.

Credit PREPAID INSURANCE (asset)

6) ADJUSTMENT FOR DEPRECIATION EXPENSE

Debit DEPRECIATION EXPENSE-TRUCK, CAR, EQUIPMENT, ETC.

Credit ACCUMULATED DEPRECIATION-TRUCK, CAR, EQUIPMENT, ETC.

7) ADJUSTMENT FOR SALARIES OWED BUT UNPAID

Debit SALARIES EXPENSE (could be SALES, OFFICE, etc.)

Credit SALARIES PAYABLE