P3-10 (Adjusting and Closing)Presented below is the December 31 trial balance of New York Boutique.
Instructions
(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 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.
Instructions
(a)Prepare a complete worksheet.
(b)Prepare a classified balance sheet. (Note:$10,000 of the mortgage payable is due for payment in the next fiscal year.)
(c)Journalize the adjusting entries using the worksheet as a basis.
(d)Journalize the closing entries using the worksheet as a basis.
(e)Prepare a post-closing trial balance.