Question

PLEASE COMPLETE THE FOLLOWING PROBLEM!! ASAP

The following trial balance was taken from the records of XYZ Company on December 31, 2020. Credit Debit $ 12,000 40,000 7,000 $ 1,800 54,000 4,800 125,000 Cash. Accounts Receivable. ........... Notes Receivable. Allowance for doubtful accounts.... Merchandise Inventory.................. Prepaid Insurance.............. Furniture and Equipment. Accumulated Depreciation-Furn. And Equip...... Accounts Payable.. Common Stock.............. Retained Earnings. Sales Cost of Goods Sold... Salaries Expense. Rent Expense..... Totals. 15,000 10,800 44,000 55,000 310,000 131,000 50,000 12.800 $ 436,600 $ 436,600 At year end, the following items have not yet been recorded. Insurance expired during the year, $2,000 Estimated bad debts, 5% of accounts receivable (use aging/analysis) Depreciation on furniture and equipment, 12% per year Interest at 8% for one year is receivable on the note dated March 1, 2017 Remaining rent prepaid in advance on December 31, 2019, $5,400 (originally charged to expense) f) Accrued salaries on December 31, $5,800 d) Instructions: 1. Prepare adjusting entries. 2. Prepare closing entry/entries.

Answer 1

XYZ Company Adjusting entries Date Account 31-Dec Insurance expense Prepaid Insurance Credit Calculation Debit $ 2,000 $ 2,000 $ 200 =(40,000*5%) -1,800 31-Dec Bad debts expense Allowance for doubful accounts $ 200 $ 15,000 =125,000*12% 31-Dec Depreciation expense Accumulated Depreciation - Furn and Equip. $ 15,000 $ 560 =7,000*8% 31-Dec Interest Receivable Interest income $ 560 $ 5,400 31-Dec Prepaid Rent Rent expense $ 5,400 $ 5,800 $ 5,800 31-Dec Salaries expense Salaries Payable Closing entries 31-Dec Sales Interest income Income Summary $ 310,000 $ 560 $ 310,560 $ 211,400 31-Dec Income Summary Cost of goods sold Salaries expense Rent expense Insurance expense Bad debts expense Depreciation expense $ 131,000 $ 55,800 $ 7,400 $ 2,000 $ 200 $ 15,000 $ 99,160 31-Dec Income Summary Retained Earnings $ 99,160

Adjustments Debit Credit Unadjusted TB Debit Credit 12,000 40,000 7,000 Adjusted TB Debit Credit 12,000 40,000 7,000 560 560 1,800 200 2,000 54,000 4,800 2,000 54,000 2,800 5,400 125,000 5,400 125,000 15,000 XYZ Company Account Names Cash Accounts Receivable Notes Receivable Interest Receivable Allowance for doubful accounts Merchandise Inventory Prepaid Insurance Prepaid Rent Furniture and Equipment Accumulated Depreciation - Furn and Equip. Accounts Payable Salaries Payable Common Stock Retained Earnings Sales Cost of goods sold Salaries expense Rent expense Insurance expense Bad debts expense Depreciation expense Interest income Totals 15,000 10,800 5,800 30,000 10,800 5,800 44,000 55,000 310,000 44,000 55,000 310,000 131,000 50,000 12,800 5,800 5,400 131,000 55,800 7,400 2,000 200 15,000 2,000 200 15,000 560 28,960 560 458,160 436,600 436,600 28,960 458,160