Question

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.

Answer 1

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