Question

The following list includes selected permanent accounts and all of the temporary accounts from the December 31 unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system. Credit Debit $ 37,500 7,100 48,000 $589,000 Merchandise inventory Prepaid selling expenses Dividends Sales Sales returns and allowances Sales discounts Cost of goods sold Sales salaries expense Utilities expense Selling expenses Administrative expenses 20,500 6,500 242,000 63,000 22,500 43,500 120,000 Additional Information Accrued and unpaid sales salaries amount to $1,300. Prepaid selling expenses of $2,400 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $33,200 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.

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Answer 1

Credit Date Debit $1,300 General Journal Dec 31 Sales salaries expense Salaries payable ( To record sales salaries expense) $1,300 $2,400 $2,400 Dec 31 selling expenses Prepaid selling expenses (To record prepaid selling expenses) $4,300 Decal Cost of goods sold Merchandise inventory ICTo record cost of goods sold) $4,300 Calculation: Adjusting entry : Inventory shrinkage - Meschandise inventory - Groods still available $ 37,500 - $ 33200 $ 4,300

Debit Credit $589,000 Date General Journal Dec 31 Sales Income summary I(To record sales) $589,000 $526,000 Dec 31 Income summary sales retwins and allowance sales discounts Cost of goods sold sales salaries expense selling expenses Utilities expense Administrative expenses ( To record expenses) $20,500 $ 6,500 $246,300 $ 64,300 & 45,900 |$22,500 $120,000 Dec 31 $ 63,000 Income summary Retained Earnings ( To record retained earnings) $ 63,000 Decal 1$ 48,000 Retained Earnings Dividends (To record dividends) $48,000

Calculations Closing entries : Cost of goods sold = - - Cost of goods sold & Inventory Shrinkage $ 242,000 + $ 4,300 $246,300 salaries Sales salaries expense - Sales salaries expense + Accrued sales = $ 63,000 + $ 1,300 = $ 64,300 Selling expenses + Prepaid selling expense $ 43,500 + $ 2,400 $ 45, 900 Selling expenses - = = Retained Earnings = sales - sales retwins and allowance - Sales discount - Cost of goods sold - sales salaries expense - selling expenses - Utilities expense - Administrative expenses $ 589,000 - $20,500 - $6,500 --- $246,300 - $ 64,300" -$45,900 - $22,500-$120,000 $ 63,000