Questions 1-4

104 Part 1 Financial Accounting Case 4-2 Save-Mart 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 Credit Balances Debit Balances Accumulated depreciation on store equipment $ 11,420 88,500 88,970 100,000 33,500 988,700 Cash Accounts receivable Merchandise inventory Store equipment Supplies inventory Prepaid insurance Selling expense Sales salaries Miscellaneous general expense Sales discounts Interest expense Social Security tax expense 88,860 127,430 903,130 70,970 17,480 12,430 10,880 47,140 18,930 3,340 7,100 3,400 1,311,090 Notes payable Accounts payable Common stock Retained earnings Sales Total Total $1,311,090 7. The statement sent by the bank, adjusted for checks The data for the adjustments are 1. Cost of merchandise sold, $604,783. 2. Store equipment had a useful life of seven years. outstanding, showed a balance of $88,110. The dif- ference represented bank service charges. (All equipment was less than seven years old.) 3. Supplies inventory, February 28, S3,877. (Pur Questions chases of supplies during the year were debited to the Supplies Inventory account.) 1. Set up T accounts with the balances given above. 5. The note payable was at an interest rate of9 per- 2. Journalize and post adjusting entries, adding other 4. Expired insurance, $7,125. cent, payable monthly. It had been outstanding throughout the year. T accounts as necessary. 3. Journalize and post closing entries. 6. Sales salaries earned but not paid to employees, 4. Prepare an income statement for the year and a bal- $2,340 ance sheet as of February 28. Case 4-3 Copies Express