Question

Using the information from the Excel workbook from Week 3’s submission, complete a worksheet using the following information for accounting adjustments. Complete the columns for the below adjusting entries, income statement, and balance sheet. Also, record the required closing entries. Add any lines as necessary.

1. Expired insurance, $553.

2. Ending store supplies inventory, $2,632.

3. Ending office supplies inventory, $504.

4. Depreciation of store equipment, $567.

5. Depreciation of office equipment, $329.

I have completed my adjustment entries. What would the required closing entries be?

Answer 1

closing entries:

1. Adjusting entry that would have been posted

Dr. Cr.

insurance expense 553

Prepaid insurance 553

closing entry for this transaction

Dr. Cr.

Income summary 553

insurance expense 553

Insurance expense will be transferred to Profit and loss statement for the current year and insurance expense account will be closed. insurance expense will lead to decrease in profits and therefore income summary account is debited.

2.

Adjusting entry Dr. Cr.

Supplies expense XXX

store supplies XXX.

closing entry Dr. Cr.

Income summary XXX

Supplies expense XXX

(Supplies expense account transferred to income statment and supplies expense balance closed)

Supplies expense will be calculated as

opening balance in supplies account

add: purchases during the year

less: ending balance in supplies account.

whatever supplies are used during the year will be transferred to supplies expense account and the supplies asset balance will be reduced for the same amount.

3.

Adjusting entry Dr. Cr.

Supplies expense XXX

office supplies XXX.

closing entry Dr. Cr.

Income summary XXX

Supplies expense XXX

(Supplies expense account transferred to income statment and supplies expense balance closed)

Supplies expense will be calculated as

opening balance in supplies account

add: purchases during the year

less: ending balance in supplies account.

whatever supplies are used during the year will be transferred to supplies expense account and the supplies asset balance will be reduced for the same amount.

4.   

Dr. Cr.

Depreciation 567

accumulated dep of Store equipment 567

(depreciation expense created for the current period)

Closing entries

Dr. Cr.

Income summary 567

Depreciation expense 567

(depreciation transferred to income statement leading to decraese in income and depreciation account closed)

5.

Dr. Cr.

Depreciation 329

accumulated dep of office equipment 329

(depreciation expense created for the current period)

Closing entries

Dr. Cr.

Income summary 567

Depreciation expense 567

(depreciation transferred to income statement leading to decraese in income and depreciation account closed)