[peacockkids]

Closing entries for a merchandise business are they similar to a service business.

[morgaine300]

Closing entries are closing entries. The purpose is to close out all revenues, expenses and drawing/dividend. To do so, you do the opposite of its balance. If it has a debit balance, you credit it. If it has a credit balance, you debit it.

The only difference with merchandising is that you'll have contra revenue (and maybe expense) for the first time. So close all the credit accounts together, and then all the debit accounts together. (e.g. since Sales Discounts is a debit account, close it with the expenses which are debit accounts, etc.) But otherwise, same thing. In fact, you don't have to do what I just said with the contra accounts, as long as they get reversed out. That's just what most books would do.