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.

Dr.

Cash

Cr.

Balance

$18,500

Balance

$700

Dr.

Prepaid Insurance

Cr.

Balance

$5,100

Balance

$35,000

Balance

$80,600

Balance

$600,000

Dr.

Salaries and Wages Expense (Sales)

Cr.

Balance

$50,000

Dr.

Salaries and Wages Expense (Administrative)

Cr.

Balance

$65,000

Dr.

Account Receivable

Cr.

Balance

$32,000

Dr.

Inventory

Cr.

Balance

$80,000

Dr.

Equipment

Cr.

Balance

$84,000

Balance

$28,000

Balance

$10,000

Dr.

Cost of Goods Sold

Cr.

Balance

$408,000

Dr.

Advertising expense

Cr.

Balance

$6,700

Dr.

Supplies Expense

Cr.

Balance

$5,000

Date

Particulars

Debit ($)

Credit ($)

1

Bad debt expense

1,400

Allowance for doubtful accounts

1,400

2

Depreciation expense-Furniture and Equipment

12,000

Accumulated depreciation-Furniture and equipment

12,000

3

Insurance expense

2,550

Prepaid insurance

2,550

4

Interest expense

3,360

Interest payable

3,360

5

Sales salaries expense

2,400

Salaries payable

2,400

6

Prepaid advertising expense

700

Advertising expense

700

7

Office Supplies

1,500

Office expense

1,500

Date

Particulars

Debit ($)

Credit ($)

Dec. 31

Sales

$600,000

Income Summary

$600,000

Dec. 31

Income Summary

554,210

Cost of goods sold

408,000

Advertising expense

6,000

Administrative salaries expense

65,000

Sales salaries expense

52,400

Office expense

3,500

Insurance expense

2,500

Bad debt expense

1,400

Depreciation expense-Furniture and

equipment

12,000

Interest expense

3,360

Dec.31

Income Summary

45,790

Retained earnings

45,790

Dr.

Cash

Cr.

Balance

$18,500

Dr.

Inventory

Cr.

Balance

$80,000

Balance

$5,100

Adj.

2,550

2,550

Balance

$80,600

Balance

$50,000

Cls.

52,400

Adj.

2,400

$52,400

$52,400

Adj.

1,400

Cls.

1,400

Adj.

$3,360

Dr.

Office Supplies

Cr.

Adj.

1,500

Balance

$10,000

Inc.

45,790

Bal.

55.790

Dr.

Account Receivable

Cr.

Balance

$32,000

Dr.

Furniture and Equipment

Cr.

Balance

$84,000

Balance

$28,000

Cls.

$600,000

Balance

$600,000

Balance

$6,700

Adj.

700

Cls.

6,000

6,700

Balance

$5,000

Adj.

1,500

Cls.

3,500

$5,000

$5,000

Adj.

12,000

Cls.

12,000

Adj.

$2,400

Balance

$408,000

Cls.

408,000

Balance

700

Inc.

1,400

2,100

Balance

$35,000

Adj.

12,000

47,000

Balance

$65,000

Cls.

65,000

Adj.

2,550

Cls.

2,550

Adj.

3,360

Cls.

3,360

Dr.

Prepaid Advertising

Cr.

Adj.

700

Exp.

554,210

Sales

600,000

Inc.

45,790

600,000

600,000