P3-9 (Adjusting and Closing) Nancy Drew Boutique

p3-9_nancy_drew_boutique x
*P3-9 (Adjusting and Closing)                                  Presented below is the December 31 trial balance of Nancy Drew 

Boutique.

NANCY DREW BOUTIQUETRIAL BALANCEDECEMBER 31Debit CreditCash $ 18,500Accounts Receivable 42,000Allowance for Doubtful Accounts $ 700Inventory, December 31 80,000Prepaid Insurance 5,100Furniture and Equipment 84,000Accumulated Depreciation—Furniture and Equipment 35,000Notes Payable 28,000Common Stock 80,600Retained Earnings 10,000Sales 600,000Cost of Goods Sold 398,000Sales Salaries Expense 50,000Advertising Expense 6,700Administrative Salaries Expense 65,000Office Expense 5,000$754,300 $754,300Instructions(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. 

P3-9 (Adjusting and Closing) Presented below is the December 31 trial balance of Nancy Drew
Boutique.
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.

(a), (b), (c)

Bal.

Bal.

Bal.

Bal.

Adj.

Bal.

Adj.

Bal.

Bal.

65,000

Bal.

Cls.

Bal.

Adj.

Cls.

2,550

Bal.

Cls.

Bal.

Adj.

700

Adj.

3,360

Adj.

Close

52,400

6,700

Adj.

Cls.

1,400

Bal.

Adj.

Adj.

700

Close

5,000

Adj.

3,360

Adj.

Cls.

14,000

Sales

600,000

600,000

600,000

Adj.

1,500

Adj.

Bal.

Bal.

Cls.

398,000

Inc.

Bal.

Cash	Accounts Receivable	Allow. for Doubtful Accts.
															Bal.	18,500	42,000					700
													Adj.				1,400
Inventory	Furniture & Equipment	Accum. Depr. of F. & E.
80,000	Bal.	84,000	35,000
	14,000
Prepaid Insurance	Notes Payable	Admin. Salaries Expense
5,100				2,550	28,000			65,000							Cls.
Common Stock		Sales	Insurance Expense
80,600					600,000		600,000		2,550
Sales Salaries Expense	Advertising Expense	Interest Expense
50,000		52,400	6,700						3,360			Close
2,400						6,000
	52,400		6,700
Bad Debt Expense	Office Expense	Prepaid Advertising Expense
	1,400	5,000				1,500
	3,500
	5,000
Interest Payable	Depr. Exp.—Furn. & Equip.	Income Summary
		14,000	Exp.		546,210
	Inc.	53,790
Office Supplies	Salaries Payable
		2,400
Retained Earnings	Cost of Goods Sold
10,000			398,000
		53,790
63,790

1,400

1,400

14,000

14,000

2,550

2,550

3,360

3,360

2,400

2,400

700

700

1,500

1,500

600,000

600,000

Dec. 31

546,210

398,000

Advertising Expense

6,000

65,000

52,400

Office Expense

3,500

2,550

1,400

3,360

Dec. 31

Income Summary

53,790

53,790

(b)	-1-
Bad Debts Expense
Allowance for Doubtful Accounts
-2-
Depreciation Expense—Furniture and Equipment ($84,000 ÷ 6)
Accum. Depr.—Furniture and Equipment
-3-
Insurance Expense
Prepaid Insurance
-4-
Interest Expense
Interest Payable
-5-
Sales Salaries Expense
Salaries Payable
-6-
Prepaid Advertising Expense
	Advertising Expense
-7-
Office Supplies
	Office Expense
(c)			Dec. 31
Sales
Income Summary
	Income Summary
Cost of Goods Sold
Administrative Salaries Expense
Sales Salaries Expense
Insurance Expense
Bad Debt Expense
Depreciation Expense—Furniture and Equipment 14,000
Interest Expense
Retained Earnings