Question

Presented below is the December 31 trial balance of Sheridan Boutique.

SHERIDAN BOUTIQUE TRIAL BALANCE DECEMBER 31
		Debit		Credit
Cash		$26,200
Accounts Receivable		42,000
Allowance for Doubtful Accounts				$660
Inventory, December 31		82,270
Prepaid Insurance		6,650
Equipment		91,000
Accumulated Depreciation—Equipment				37,270
Notes Payable				29,300
Common Stock				80,223
Retained Earnings				9,890
Sales Revenue				701,667
Cost of Goods Sold		477,500
Salaries and Wages Expense (sales)		56,000
Advertising Expense		6,850
Salaries and Wages Expense (administrative)		65,350
Supplies Expense		5,190
		$859,010		$859,010

Please complete the below:

1. Construct T-accounts and enter the balances shown.

2. Prepare adjusting journal entries for the following. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

1.		Bad debt expense is estimated to be $1,469.
2.		Equipment is depreciated based on a 7-year life (no salvage value).
3.		Insurance expired during the year $2,392.
4.		Interest accrued on notes payable $3,061.
5.		Sales salaries and wages earned but not paid $2,253.
6.		Advertising paid in advance $660.
7.		Office supplies on hand $1,500, charged to Supplies Expense when purchased.

3. Post to the T-accounts.

4. Prepare closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

5. Post closing entries.

Answer 1

Adjusting Journal entries

Date	Account Title	Ref	Debit ($)	Credit ($)
1	Bad Debt Expenses		$ 1,469
	Accounts Receivable			$ 1,469
2	Depreciation Expense - Equipment		$ 13,000
	Accumulated Depreciatio - Equipment			$13,000
3	Insurance Expense		$ 2,392
	Prepaid Insurance			$ 2,392
4	Interest Expense		$ 3,061
	Interest Payable			$3,061
5	Salaries and Wages Expense (Sales)		$ 2,253
	Salaries and Wages Payable (Sales)			$ 2,253
6	Prepaid Advertising		$ 660
	Cash			$ 660
7	Supplies		$ 1500
	Supplies Expense			$1500

Closing journal entries

Date	Account Titles	Ref	Debit ($)	Credit ($)
a	Sales Revenue		$ 701,667
	Income Summary			$ 701,667
b	Income Summary		$ 624,814
	Cost of Goods sold			$ 477,500
	Salaries and Wages Expense (Sales)			$ 58,253
	Advertising Expense			$ 6,850
	Salaries and Wages Expense (Administration)			$ 65,350
	Supplies Expense			$ 3,690
	Bad Debt Expense			$ 1,469
	Depreciation Expense			$ 13,000
	Interest Expense			$ 2,392
c	Income Summary		$ 76,853
	Retained Earnings			$ 76,853

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