(L02,3,5,6) (Adjusting and Closing) Presented below is the December 31 trial balance of New York 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 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.

Transcribed Image Text:

NEW YORK BOUTIQUE TRIAL BALANCE DECEMBER 31 Debit Credit Cash Accounts Receivable Allowance for Doubtful Accounts Inventory, December 31 Prepaid Insurance $ 18,500 32,000 700 80,000 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