QuestionP3.10.(adjusting and Closing)

16 May QuestionP3.10.(adjusting and Closing)

Posted at 16:41h in Essay Writing Services by Past Papers

Question

P3.10.

(adjusting and Closing)

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.)

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.

(c)

Prepare closing entries and post to the accounts.

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