Share
Explore BrainMass

Nancy Drew Boutique -Trial Balance Sheets

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

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

Instructions:
(a) Construct T-accounts and enter the balances shown.
(b) Prepare adjusting jouranl 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.

Attachments

Solution Summary

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

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

Instructions:
(a) Construct T-accounts and enter the balances shown.
(b) Prepare adjusting jouranl 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.

$2.19