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    P3-9 Nancy Drew Boutique - Adjusting and Closing

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    P3-9 Adjusting and Closing
    Presented below is the December 31 trial balance of Nancy Drew Boutique:

    Nancy Drew Boutique
    Trial Balance
    For the Year Ended December 31, 20XX
    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.

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    Solution Summary

    P3-9 Adjusting and Closing
    Presented below is the December 31 trial balance of Nancy Drew Boutique:

    Nancy Drew Boutique
    Trial Balance
    For the Year Ended December 31, 20XX
    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

    $2.19

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