NEW YORK BOUTIQUE

P3.10.  (adjusting and Closing)

4 5 6 7
Presented below is the December 31 trial balance of New York Boutique.
NEW YORK BOUTIQUE
Trial Balance
December 31
 

Debit

Cash

Credit

18,500 $

 

32,000

 

 

 700   $

80,000

 

5,100

 

84,000

 

Accumulated Depreciation—Equipment

 

35,000

Notes Payable

 

28,000

Common Stock

 

80,600

Retained Earnings

 

10,000

Sales Revenue

 

600,000

408,000

 

50,000

 

6,700

 

65,000

 

5,000

 

$754,300

$754,300

Accounts Receivable
Allowance for Doubtful Accounts
Inventory, December 31
Prepaid Insurance
Equipment

Cost of Goods Sold
Salaries and Wages Expense (sales)
Advertising Expense
Salaries and Wages Expense (administrative)
Supplies Expense
 

Instructions

(a)  Construct T­accounts and enter the balances shown.

(b)  Prepare adjusting journal entries for the following and post to the T­accounts.  
(Omit explanations.) Open additional T­accounts 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 7­year 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.