Acc421 Intermediate Accounting: P3-9 Presented below is the December 31 trial balance of Nancy

Acc421 Intermediate Accounting

*P3-9 (Adjusting and Closing)
Presented below is the December 31 trial balance of Nancy Drew Boutique.
December 31, 2012
Debit Credit
Cash 18,500
Accounts Receivable 42,000
Allowance for Doubtful Accounts 700
Inventory, December 31 80,000
Prepaid Insurance 5,100
Furniture and Equipment 84,000
Accumulated Depreciation—Furniture and Equipment 35,000
Notes Payable 28,000
Common Stock 80,600
Retained Earnings 10,000
Sales 600,000
Cost of Goods Sold 398,000
Sales Salaries Expense 50,000
Advertising Expense 6,700
Administrative Salaries Expense 65,000
Office Expense 5,000
754,300 754,300

(a) Construct T-accounts and enter the balances shown.
(b) Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.)
Open additional T-accounts as necessary. (The books are closed yearly on December 31.)
(1) Bad debts are estimated to be $1,400.
(2) Furniture and equipment is depreciated based on a 6-year life (no salvage value).
(3) Insurance expired during the year $2,550.
(4) Interest accrued on notes payable $3,360.
(5) Sales salaries earned but not paid $2,400.
(6) Advertising paid in advance $700.
(7) Office supplies on hand $1,500, charged to Office Expense when purchased.
(c) Prepare closing entries and post to the accounts.
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