Accounting

Big Ed’s Motorcycle Shop is nearing the fiscal year-end. You have been asked to prepare the adjusting and closing entries to prepare the books for the 2008 year-end.

 

Download Big Ed’s trial balance to begin preparing your adjusting and closing entries:

Following is the information you will need to make your adjusting entries:

1. Office equipment has a life of five years with no residual value.
2. Store equipment has a life of five years with no residual value.
3. Shop equipment has a life of ten years with no residual value (assume new equipment was purchased Jan. 1.)
4. A physical inventory of Merchandise Inventory, Parts revealed an actual balance of $97,000.
5. A physical inventory of Merchandise Inventory, Motorcycles revealed that the balance was accurate.
6. Office supplies in the amount of $1,500 were used throughout the year.
7. Salaries should be accrued as follows:Sales – $3,000Service – $5,000Office – $1,500
8. Insurance in the amount of $1,200 was used throughout the year.
9. Interest on the Note Payable is 8% (assume new note was taken out on Jan. 1.)

 

Once you have completed the adjusting entries, prepare your closing entries. 

20×8

Ed’s Motorcycle Shop

1,920

2,212,500

Big

Trial Balance

For the Period Ended December 31, 20×8

Unadjusted Trial Balance

DR

CR

Cash

18

4,500

Accounts Receivable

145,200

Merchandise Inventory, Parts

100,000

Merchandise Inventory, Motorcycles

110,000

Office Supplies

6,720

Prepaid Insurance

4,080

Office Equipment

50,000

Accumulated Depreciation-Office Equipment

7,500

Store Equipment

52,000

Accumulated Depreciation-Store Equipment

7,860

Shop Equipment

183,600

Accumulated Depreciation-Shop Equipment

41,040

Accounts Payable

66,720

Salaries Payable

Interest Payable

Note Payable (due 2010)

67,200

Ed Silver, Capital

534,180

Ed Silver, Drawing

42,000

Sales

1,488,000

Cost of Merchandise Sold

930,000

Sales Salaries Expense

207,840

Service Salaries Expense

100,980

Office Salaries Expense

Advertising Expense

52,560

Depreciation Expense-Office Equipment

Depreciation Expense-Store Equipment

Depreciation Expense-Shop Equipment

Miscellaneous Selling Expense

1,920

Rent Expense

37,620

Insurance Expense

– 0

Interest Expense

Office Supplies Expense

1,560

Miscellaneous Administrative Expense

2,212,500

20×7

Trial Balance

DR CR

Cash

Accounts Receivable

Merchandise Inventory, Parts

Merchandise Inventory, Motorcycles

Office Supplies

Prepaid Insurance

Office Equipment 50,000
Accumulated Depreciation-Office Equipment 7,500
Store Equipment 52,000
Accumulated Depreciation-Store Equipment 7,860

Shop Equipment

Accumulated Depreciation-Shop Equipment 41,040

Accounts Payable

Salaries Payable 7,500
Interest Payable 4,500
Note Payable (due 2010)

Ed Silver, Capital 534,180

724,780

Big Ed’s Motorcycle Shop
For the Period Ended December 31, 20×7
81,900
179,200
115,000
71,980
4,220
1,880
168,600
65,000
57,200
	724,780