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:
- Office equipment has a life of five years with no residual value.
- Store equipment has a life of five years with no residual value.
- Shop equipment has a life of ten years with no residual value (assume new equipment was purchased Jan. 1.)
- A physical inventory of Merchandise Inventory, Parts revealed an actual balance of $97,000.
- A physical inventory of Merchandise Inventory, Motorcycles revealed that the balance was accurate.
- Office supplies in the amount of $1,500 were used throughout the year.
- Salaries should be accrued as follows:Sales – $3,000Service – $5,000Office – $1,500
- Insurance in the amount of $1,200 was used throughout the year.
- 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
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
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 |