Acc421 Intermediate Accounting: P3-10 Presented below is the December 31 trial balance of New York

Acc421 Intermediate Accounting

P3-10 (Adjusting and Closing)
Presented below is the December 31 trial balance of New York Boutique.
December 31

Debit Credit
Cash 18,500
Accounts Receivable 32,000
Allowance for Doubtful Accounts 700
Inventory, December 31 80,000
Prepaid Insurance 5,100
Equipment 84,000
Accumulated Depreciation – Equipment 35,000
Notes Payable 28,000
Common Stock 80,600
Retained Earnings 10,000

Sales Revenue 600,000
Cost of Goods Sold 408,000
Salaries and Wages (Sales) 50,000
Advertising Expense 6,700
Salaries and Wages (Administrative) 65,000
Supplies Expense 5,000
$754,300 $754,300

a. Construct T-accounts and enter balances shown.
b. Prepare adjusting journal entries for the following and post to the T-Accounts
1. Bad debt expense is estimated to be $1,400.
2. Equipment is depreciated based on a 7-year life (no salvage value).
3. Insurance expired during the year $2,550.
4. Interest accrued on notes payable $3,360.
5. Sales salaries and wages earned but not paid $2,400.
6. Advertising paid in advance $700.
7. Office supplies on hand $1,500, charged to Supplies Expense when purchased.
c. Prepare closing entries and post to the accounts.
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