Presented below is the December 31 trial balance of Nancy Drew Boutique.

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 debts are estimated to be $1,400.
(2) Furniture and equipment is depreciated based on a 6-year life (no salvage value).
(3) Insurance expired during the year $2,550.
(4) Interest accrued on notes payable $3,360.
(5) Sales salaries earned but not paid $2,400.
(6) Advertising paid in advance $700.
(7) Office supplies on hand $1,500, charged to Office Expense when purchased.
(c) Prepare closing entries and post to theaccounts.

Transcribed Image Text:

Nancy Drew Boutique Trial Balance December 31 Cash Accounts Receivable Allowance for Doubtful Accounts Inventory, December 31 Prepaid Insurance Furniture and Equipment Accumulated Depreciation-Furniture and Equipment Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold Sales Salaries Expense Advertising Expense Administrative Salaries Expense Office Expense $18,500 42,000 $ 700 80,000 5,100 84,000 35,000 28,000 80,600 10,000 600,000 398,000 50,000 6,700 65,000 5,000 $754,300 $754,300