Question
Requirements: a. Copy the trial balance above in the first two columns of a 10-column work sheet. b. Prepare adjusting journal entries in journal form
Requirements:
a. Copy the trial balance above in the first two columns of a 10-column work sheet.
b. Prepare adjusting journal entries in journal form from the following information (the fiscal year ends December 31).
1. Estimated bad debts, .5% of sales less returns and allowances.
2. Depreciation on building 4% per year; on furniture and fixtures, 10% per year.
3. Insurance expired during the year, $3,900.
4. Interest at 12% is payable on the mortgage on January 1 of each year
5. Sales salaries accrued, December 31, $4,000.
6. Advertising expense paid in advance, $740.
7. Office supplies on hand December 31, $1,600 (charged to Miscellaneous Office Expenses when purchased).
8. Interest accrued on notes payable, December 31, $1,500.
c. Transfer the adjusting entries to the work sheet and complete it.
d. Prepare an income statement, a balance sheet, and a statement of retained earnings.
e. Prepare closing journal entries.
f. Indicate the adjusting entries that would be reversed.
Debit | Credit | |
Cash | 13,600 | |
Accounts Receivable | 64,800 | |
Allowance for Doubtful Accounts | 2,000 | |
Inventory | 76,000 | |
Office Supplies | ||
Land | 40,000 | |
Building | 90,000 | |
Accumulated Depreciation of Building | 14,400 | |
Furniture and Fixtures | 22,000 | |
Accumulated Depreciation of Furniture and Fixtures | 6,600 | |
Prepaid Insurance | 7,800 | |
Prepaid Advertising | ||
Accounts Payable | 34,200 | |
Salaries Payable | ||
Interest Payable | ||
Notes Payable | 30,000 | |
Mortgage Payable | 40,000 | |
Common Stock | 60,000 | |
Retained Earnings | 64,730 | |
Sales | 720,000 | |
Sales Returns and Allowances | 2,800 | |
Sales Discounts | 5,900 | |
Cost of Goods Sold | 533,700 | |
Sales Salaries Expense | 54,000 | |
Advertising Expense | 9,400 | |
Salaries Expense, Office and General | 31,000 | |
Heat, Light, and Water Expense | 15,100 | |
Telephone Expense | 1,700 | |
Miscellaneous Office Expenses | 2,000 | |
Bad Debt Expense | ||
Depreciation Expense | ||
Insurance Expense | ||
Interest Expense | 2,130 | |
Subtotal | ||
Net Income | ||
Totals | 971,930 | 971,930 |
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