p3 9 adjusting and closing nancy drew boutique 495314

*P3-9 (Adjusting and Closing)
Presented below is the December 31 trial balance of Nancy DrewBoutique. NANCY DREW BOUTIQUE

TRIAL BALANCE

DECEMBER 31

Debit Credit

Cash $ 18,500

Accounts Receivable 42,000

Allowance for Doubtful Accounts $ 700

Inventory, December 31 80,000

Prepaid Insurance 5,100

Furniture and Equipment 84,000

Accumulated Depreciation Furniture and Equipment 35,000

Notes Payable 28,000

Common Stock 80,600

Retained Earnings 10,000

Sales 600,000

Cost of Goods Sold 398,000

Sales Salaries Expense 50,000

Advertising Expense 6,700

Administrative Salaries Expense 65,000

Office Expense 5,000

$754,300 $754,300

Instructions

(a) Construct T-accounts and enter the balances shown.

(b) Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.)

Open additional T-accounts as necessary. (The books are closed yearly on December 31.)

(1) Bad debts are estimated to be $1,400.

(2) Furniture and equipment is depreciated based on a 6-year life (no salvage value).

(3) Insurance expired during the year $2,550.

(4) Interest accrued on notes payable $3,360.

(5) Sales salaries earned but not paid $2,400.

(6) Advertising paid in advance $700.

(7) Office supplies on hand $1,500, charged to Office Expense when purchased.

(c) Prepare closing entries and post to the accounts.

Attachments:

nancy_drew_bo….docx