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P3-9 Nancy Drew Boutique - Adjusting and Closing

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