Answer all.

Save-Mart was a retail store. Its account balances on February 28 (the end of its fiscal year), before adjust- ments, were as shown below. Debit Balances Credit Balances Cash 88,860 Accumulated depreciation on store equipment $ 11,420 Accounts receivable ---1-27,430 Merchandise inventory 903,130 Notes payable 88,500 70,970 Accounts payable 88,970 Store equipment Supplies inventory Prepaid insurance 17,480 Common stock 100,000 12,430 Retained earnings 33,500 988,700 10,880 Sales Selling expense Sales salaries 47,140 Miscellaneous general expense 18,930 Sales discounts 3,340 Interest expense 7,100 3,400 Social Security tax expense Total $1,311,090 Total $1,311,090 The data for the adjustments are 1. Cost of merchandise sold, $604,783. 7. The statement sent by the bank, adjusted for checks outstanding, showed a balance of $88,110. The dif- ference represented bank service charges. 2. Store equipment had a useful life of seven years. (All equipment was less than seven years old.) 3. Supplies inventory, February 28, $3,877. (Pur- chases of supplies during the year were debited to the Supplies Inventory account.) Questions 4. Expired insurance, $7,125. 5. The note payable was at an interest rate of 9 per- cent, payable monthly. It had been outstanding throughout the year. 1. Set up T accounts with the balances given above. 2. Journalize and post adjusting entries, adding other T accounts as necessary. 3. Journalize and post closing entries. 6. Sales salaries earned but not paid to employees, $2,340. 4. Prepare an income statement for the year and a bal- ance sheet as of February 28. Question 5: Explain the effects on balance sheet come statement accounts if adjusting entries were not prepared by Save-Mart. Identify the amount of understatement or overstatement in EACH accounts