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Presented below is the december 31 trial balance of new york boutique

19/11/2020 Client: arwaabdullah Deadline: 12 Hours

P3.10.

(adjusting and Closing)

4 5 6 7

Presented below is the December 31 trial balance of New York Boutique.

NEW YORK BOUTIQUE

Trial Balance

December 31

Debit

Credit

Cash

18,500 $

Accounts Receivable

32,000

Allowance for Doubtful Accounts

 700   $

Inventory, December 31

80,000

Prepaid Insurance

5,100

Equipment

84,000

Accumulated Depreciation—Equipment

35,000

Notes Payable

28,000

Common Stock

80,600

Retained Earnings

10,000

Sales Revenue

600,000

Cost of Goods Sold

408,000

Salaries and Wages Expense (sales)

50,000

Advertising Expense

6,700

Salaries and Wages Expense (administrative)

65,000

Supplies Expense

5,000

$754,300

$754,300

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.

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