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21 May, 09:35

Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,800 have expired. A physical count of year-end merchandise inventory shows $34,400 of goods still available. (a) Use the above account balances along with the additional information, prepare the adjusting entries. (b) Use the above account balances along with the additional information, prepare the closing entries.

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  1. 21 May, 10:45
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    Missing information:

    Debit Credit

    Merchandise inventory $35,000

    Prepaid selling expenses $6,600

    Dividends $43,000

    Sales $569,000

    Sales returns and allowances $19,500

    Sales discounts $6,000

    Cost of goods sold $232,000

    Sales salaries expense $58,000

    Utilities expense $20,000

    Selling expenses $41,000

    Administrative expenses $115,000

    Answer:

    Adjusting entries

    Dr Salaries expense 1,700

    Cr Salaries payable 1,700

    Dr Selling expenses 2,800

    Cr Prepaid selling expenses 2,800

    Dr Cost of goods sold 600

    Cr merchandise inventory 600

    Dividends $43,000

    Sales $569,000

    Sales returns and allowances $19,500

    Sales discounts $6,000

    Cost of goods sold $232,600

    Sales salaries expense $59,700

    Utilities expense $20,000

    Selling expenses $43,800

    Administrative expenses $115,000

    net income = $72,400

    Closing entries:

    Dr Sales 543,500

    Cr Income summary 543,500

    Dr Income summary 471,100

    Cr Cost of goods sold 232,600

    Cr Sales salaries expense 59,700

    Cr Utilities expense 20,000

    Cr Selling expenses 43,800

    Cr Administrative expenses 115,000

    Dr Income summary 72,400

    Cr Retained earnings 72,400

    Dr Retained earnings 43,000

    Cr Dividends 43,000
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