29 Jun Question P3.10. (adjusting and Closing)
Question
P3.10.
(adjusting and Closing)
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4567
Presented below is the December 31 trial balance of New York Boutique.
NEW YORK BOUTIQUE
TrialBalance
December31
Debit
Credit
Cash
18,500?$
Accounts Receivable
32,000
Allowance for Doubtful Accounts
?700???$
Inventory, December 31
80,000
Prepaid Insurance
5,100
Equipment
84,000
Accumulated Depreciation—Equipment
35,000
Notes Payable
28,000
Common Stock
80,600
Retained Earnings
10,000
Sales Revenue
600,000
Cost of Goods Sold
408,000
Salaries and Wages Expense (sales)
50,000
Advertising Expense
6,700
Salaries and Wages Expense (administrative)
65,000
Supplies Expense
5,000
$754,300
$754,300
Instructions
(a)
Construct T-accounts and enter the balances shown.
(b)
Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.) Open additional T-accounts as necessary. (The books are closed yearly on December 31.)
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1.
Bad debt expense is estimated to be $1,400.
2.
Equipment is depreciated based on a 7-year life (no salvage value).
3.
Insurance expired during the year $2,550.
4.
Interest accrued on notes payable $3,360.
5.
Sales salaries and wages earned but not paid $2,400.
6.
Advertising paid in advance $700.
7.
Office supplies on hand $1,500, charged to Supplies Expense when purchased.
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(c)
Prepare closing entries and post to the accounts.
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