NEW YORK BOUTIQUE_Financial Statements

P3.10.  

(adjusting and Closing)

4 5 6 7 

Presented below is the December 31 trial balance of New York Boutique.

NEW YORK BOUTIQUETrial BalanceDecember 31 DebitCreditCash18,500 $ Accounts Receivable32,000 Allowance for Doubtful Accounts  700   $Inventory, December 3180,000 Prepaid Insurance5,100 Equipment84,000 Accumulated Depreciation—Equipment 35,000Notes Payable 28,000Common Stock 80,600Retained Earnings 10,000Sales Revenue 600,000Cost of Goods Sold408,000 Salaries and Wages Expense (sales)50,000 Advertising Expense6,700 Salaries and Wages Expense (administrative)65,000 Supplies Expense5,000  $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 debt expense is estimated to be $1,400.2.   Equipment is depreciated based on a 7-year life (no salvage value).3.   Insurance expired during the year $2,550.4.   Interest accrued on notes payable $3,360.5.   Sales salaries and wages earned but not paid $2,400.6.   Advertising paid in advance $700.7.   Office supplies on hand $1,500, charged to Supplies Expense when purchased.   (c)  Prepare closing entries and post to the accounts.