P5-3A

Prepare financial statements and adjusting and closing entries.

(LO 4, 5)

Big Box Store is located in midtown Madison. During the past several years, net income has been declining because of suburban shopping centers. At the end of the company's fiscal year on November 30, 2017, the following accounts appeared in two of its trial balances.

	Unadjusted	Adjusted		Unadjusted	Adjusted
Accounts Payable	$?25,200	$?25,200	Notes Payable	$?37,000	$?37,000
Accounts Receivable	??30,500	??30,500	Owner's Capital	?101,700	?101,700
Accumulated Depr.Equip.	??34,000	??45,000	Owner's Drawings	??10,000	??10,000
Cash	??26,000	??26,000	Prepaid Insurance	??10,500	???3,500
Cost of Goods Sold	?518,000	?518,000	Property Tax Expense		???2,500
Freight-Out	???6,500	???6,500	Property Taxes Payable		???2,500
Equipment	?146,000	?146,000	Rent Expense	??15,000	??15,000
Depreciation Expense		??11,000	Salaries and Wages Expense	??96,000	??96,000
Insurance Expense		???7,000	Sales Revenue	?720,000	?720,000
Interest Expense	???6,400	???6,400	Sales Commissions Expense	???6,500	??11,000
Interest Revenue	???2,000	???2,000	Sales Commissions Payable		???4,500
Inventory	??32,000	??32,000	Sales Returns and Allowances	???8,000	???8,000
			Utilities Expense	???8,500	???8,500

Instructions

(a)

Prepare a multiple-step income statement, an owner's equity statement, and a classified balance sheet. Notes payable are due in 2020.

Net income $32,100

Owner's capital $123,800

Total assets $193,000

(b)

Journalize the adjusting entries that were made.

(c)

Journalize the closing entries that are necessary.