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Adjusting Entries and Closing Entries

The following trial balance was taken from the books of Fisk Corporation on December 31, 2004.

Account Debit Credit

Cash $ 12,000
Accounts Receivable 40,000
Note Receivable 7,000
Allowance for Doubtful Accounts $ 1,800
Merchandise Inventory 54,000
Unexpired Insurance 4,800
Furniture and Equipment 125,000
Accumulated Depreciation of F. & E. 15,000
Accounts Payable 10,800
Common Stock 44,000
Retained Earnings 55,000
Sales 310,000
Cost of Goods Sold 131,000
Salaries Expense 50,000
Rent Expense 12,800

Totals $436,600 $436,600

At year end, the following items have not yet been recorded.

a. Insurance expired during the year, $2,000.
b. Estimated bad debts, 1% of gross sales.
c. Depreciation on furniture and equipment, 12% per year.
d. Interest at 8% is receivable on the note for one full year.
e. Rent paid in advance at December 31, $5,400 (originally charged to expense).
f. Accrued salaries at December 31, $5,800.

(a) Prepare the necessary adjusting entries.
(b) Prepare the necessary closing entries.

Solution Summary

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