Preparing Adjusting Entries (FSET)

Fischer Card Shop is a small retail shop. Fischer's balance sheet at year-end 2021 is as follows:

FISCHER CARD SHOP
Balance Sheet
December 31, 2021
Cash		$12,750		Accounts payable	$7,800
Inventories		18,000		Wages payable	150
Prepaid insurance		5,700		Total current liabilities	7,950
Total current assets		36,450
Equipment	$11,250
Less accumulated depreciation	4,500
Equipment, net		6,750		Total equity (including Retained Earnings)	35,250
Total assets		$43,200			$43,200

The following information details transactions and adjustments that occurred during 2022. 1. Sales total $218,775 in 2022; all sales were cash sales 2. Inventory purchases total $114,300 in 2022; at December 31, 2022, inventory totals $21,750. Assume all purchases were made on account. 3. Accounts payable totals $6,150 at December 31, 2022. 4. Annual insurance premiums of $36,000 were paid on March 1, 2022, covering the next 12 months. The balance in prepaid insurance at December 31, 2021, was the balance remaining from the advance premium payment in 2021. 5. Wages are paid every other week on Friday; during 2022, Fischer paid $18,750 cash for wages. At December 31, 2022, Fischer owed employees unpaid and recorded wages of $525. 6. Depreciation on equipment totals $2,550 in 2022.

Prepare any necessary transaction entries for 2022 and adjusting entries at December 31, 2022, using the financial statement effects template. HINT: Make all related entries for the transactions and adjustments on the same line in the FSET.

		Balance Sheet												Income Statement
		Cash		Noncash		Contra												Net
		Asset	+	Assets	-	Assets	=	Liabilities	+	Equity				Revenues	-	Expenses	=	Income
	Beginning balances	12,750		34,950		4,500		7,950		35,250				-		-		-
1	Record sales	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
2	Record inventory transactions	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
3	Record vendor payments	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
4	Record insurance transactions	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
5	Record wage transactions	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
6	Record depreciation	Answer		Answer		Answer		Answer		Answer				Answer		Answer		Answer
Totals			+		-		=		+						-		=