Missing information:
Cash 1,000
Merchandise inventory 12,500
Store supplies 5,800
Prepaid insurance 2,400
Store equipment 42,900
Accumulated depreciation - Store equip. 15,250
Accounts payable 10,000
Common stock 5,000
Dividends 2,200
Retained earnings 27,000
Sales 111,950
Sales discounts 2,000
Sales returns and allowances 2,200
Cost of goods sold 38,400
Salaries expense 35,000
Rent expense 15,000
Advertising expense 9,800
Total 169,200 169,200
Answer:
the closing entries should be:
Dr Sales revenues 107,750
Cr Income summary 107,750
Dr Income summary 110,270
Cr Cost of goods sold 39,340
Cr Salaries expense 35,000
Cr Rent expense 15,000
Cr Advertising expense $9,800
Cr Supplies expense 2,950
Cr Insurance expense 1,880
Cr Depreciation expense 6,300
Dr Retained earnings 2,520
Cr Income summary 2,520
Dr Retained earnings 2,200
Cr Dividends 2,200
Step-by-step explanation:
A) Store supplies still available at fiscal year-end amount to $2,950.
Dr Supplies expense 2,950
Cr Supplies 2,950
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
Dr Insurance expense 1,880
Cr Prepaid insurance 1,880
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
Dr Depreciation expense 6,300
Cr Accumulated depreciation - Store equip. 6,300
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.
Dr Shrinkage expense or COGS (I prefer to use COGS) 940
Cr Merchandise inventory 940
the adjusted income statement:
Revenues:
- Sales $111,950
- Sales discounts ($2,000)
- Sales returns and allowances ($2,200) $107,750
Cost of goods sold ($39,340)
Gross profit $68,410
Operating expenses:
- Salaries expense ($35,000)
- Rent expense ($15,000)
- Advertising expense ($9,800)
- Supplies expense ($2,950)
- Insurance expense ($1,880)
- Depreciation expense ($6,300) ($70,930)
Net loss ($2,520)