Question

Problem 5-05A a, b1-b3, c-e (Video) The trial balance of Blue Spruce Corp. contained the following accounts at November 30, the end of the company's fiscal year. Blue Spruce Corp. Trial Balance November 30, 2020 Credit Debit $ 8,500 28,500 42,500 6,100 131,000 $ 27,000 50,500 39,400 50,000 40,000 Cash Accounts Receivable Inventory Supplies Equipment Accumulated Depreciation Equipment Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Sales Revenue Sales Returns and Allowances Cost of Goods Sold Salaries and Wages Expense Advertising Expense Utilities Expense Maintenance and Repairs Expense Freight-Out Rent Expense Totals 10,500 755,800 8,800 497,400 139,600 24,000 13,900 11,600 16,400 23,800 $962,700 $962,700 Adjustment data: 1. Supplies on hand totaled $2,500. 2. Depreciation is $14,000 on the equipment. 3. Interest of $4,000 is accrued on notes payable at November 30. 4. Inventory actually on hand is $41,800.

Answer 1

Closing Entries:

Date	Account title and Explanation	Debit	Credit
Nov.30	Sales revenue	$755,800
	Income summary		$755,800
	[To close accounts with credit balances]
Nov.30	Income Summary	$757,800
	Sales returns and allowances		$8,800
	Cost of goods sold		$498,100
	Salaries and wages expense		$139,600
	Advertising expense		$24,000
	Utilities expense		$13,900
	Maintenance and Repairs expense		$11,600
	Freight-Out		$16,400
	Rent expense		$23,800
	Supplies expense		$3,600
	Depreciation expense		$14,000
	Interest expense		$4,000
	[To close accounts with debit balances]
Nov.30	Retained earnings	$2,000
	Income summary [757,800-755,800]		$2,000
	[To close income summary account]
Nov.30	Retained earnings	$10,500
	Dividends		$10,500
	[To close dividends]

Post-closing trial balance:

Blue Spruce Corp.
Adjusted Trial Balance
November 30,2020
Account title	Debit	Credit
Cash	$8,500
Accounts receivable	$28,600
Inventory	$41,800
Supplies	$2,500
Equipment	$131,000
Accumulated depreciation-Equipment		$41,000
Notes payable		$50,500
Accounts payable		$39,400
Interest payable		$4,000
Common stock		$50,000
Retained earnings [40,000-2,000-10,500]		$27,500
Total	$212,400	$212,400

Calculations:

Adjusted Trial Balance
Account title	Debit	Credit
Cash	$8,500
Accounts receivable	$28,600
Inventory	$41,800
Supplies	$2,500
Equipment	$131,000
Accumulated depreciation-Equipment [27,000+14,000]		$41,000
Notes payable		$50,500
Accounts payable		$39,400
Interest payable		$4,000
Common stock		$50,000
Retained earnings		$40,000
Dividends	$10,500
Sales revenue		$755,800
Sales returns and allowances	$8,800
Cost of goods sold [497,400+700]	$498,100
Salaries and wages expense	$139,600
Advertising expense	$24,000
Utilities expense	$13,900
Maintenance and Repairs expense	$11,600
Freight-Out	$16,400
Rent expense	$23,800
Supplies expense [6,100-2,500]	$3,600
Depreciation expense	$14,000
Interest expense	$4,000
Total	$980,700	$980,700

Deficiency in inventory = 42,500-41,800 = 700. It should be added to cost of goods sold