Question

The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019:

Cash	$ 240,000
Accounts Receivable	966,000
Merchandise Inventory	1,690,000
Estimated Returns Inventory	22,500
Office Supplies	13,500
Prepaid Insurance	8,000
Office Equipment	830,000
Accumulated Depreciation-Office Equipment	550,000
Store Equipment	3,600,000
Accumulated Depreciation-Store Equipment	1,820,000
Accounts Payable	326,000
Customer Refunds Payable	40,000
Salaries Payable	41,500
Note Payable (final payment due 2022)	300,000
Kristina Marble, Capital	3,449,100
Kristina Marble, Drawing	100,000
Sales	11,343,000
Cost of Merchandise Sold	7,850,000
Sales Salaries Expense	916,000
Advertising Expense	550,000
Depreciation Expense-Store Equipment	140,000
Miscellaneous Selling Expense	38,000
Office Salaries Expense	650,000
Rent Expense	94,000
Depreciation Expense-Office Equipment	50,000
Insurance Expense	48,000
Office Supplies Expense	28,100
Miscellaneous Administrative Expense	14,500
Interest Expense	21,000

	Required:
1.	Prepare a single-step income statement. Combine selling expenses together in a single entry and combine administrative expenses together in a single entry. *
2.	Prepare closing entries as of May 31, 2019. Refer to the Chart of Accounts for exact wording of account titles.

* Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required.

CHART OF ACCOUNTS
Clairemont Company
General Ledger
ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 130 Merchandise Inventory 131 Estimated Returns Inventory 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 180 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Note Payable 219 Sales Tax Payable EQUITY 310 Kristina Marble, Capital 311 Kristina Marble, Drawing 312 Income Summary	REVENUE 410 Sales EXPENSES 510 Cost of Merchandise Sold 521 Delivery Expense 522 Advertising Expense 524 Depreciation Expense-Store Equipment 525 Depreciation Expense-Office Equipment 526 Sales Salaries Expense 527 Office Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 540 Miscellaneous Selling Expense 541 Miscellaneous Administrative Expense 710 Interest Expense

LabelsCurrent assetsCurrent liabilitiesExpensesFor the Year Ended May 31, 2019Long-term liabilitiesMay 31, 2019Property, plant, and equipmentAmount DescriptionsAdministrative expensesIncrease in owner’s equityKristina Marble, capital, June 1, 2018Kristina Marble, capital, May 31, 2019Less withdrawalsNet incomeNet income for the yearNet lossSelling expensesTotal assetsTotal expensesTotal current assetsTotal current liabilitiesTotal liabilitiesTotal liabilities and owner’s equityTotal property, plant, and equipment

Answer 1

1. Single Step Income statement:

Revenue & Gains		Amount
Sales		11343000
Total Sale		11343000
Expenses
Cost of Goods sold		7850000
Selling Expenses		1504000
Advertising Expenses	550000
Sales Salary Expenses	916000
Miscellaneous Selling expenses	38000
Administrative Expenses		1024600
Office Salary Expenses	650000
Insurance Expenses	48000
Office Supplies	28100
Miscellaneous Administrative expenses	14500
Depreciation expenses	190000
Rent Expenses	94000
Interest Expenses		21000
Total Expenses		10399600
Net Income		943400

2. Closing entries:

Date	Account name	Debit	Credit
31-05-2019	Sales	11343000
	Income Summary		11343000
31-05-2019	Income Summary	10399600
	Cost of Goods sold		7850000
	Advertising Expenses		550000
	Sales Salary Expenses		916000
	Miscellaneous Selling expenses		38000
	Office Salary Expenses		650000
	Insurance Expenses		48000
	Office Supplies		28100
	Miscellaneous Administrative expenses		14500
	Depreciation expenses		190000
	Rent Expenses		94000
	Interest Expenses		21000
31-05-2019	Income Summary	943400
	Retained earning		943400
31-05-2019	Retained earning	100000
	drawing		100000

Balance Sheet as on 31/05/2019:

Assets		Amount
cash		240000
Accounts receivable		966000
Mercandise inventory		1690000
Prepaid insurance		8000
Office equipment	830000	280000
Less: Accumulated depreciation	-550000
Store equipment	3600000	1780000
Less: Accumulated depreciation	1820000
Office supplies		13500
Estimated returns inventory		22500
Total Assets		5000000
Liability		Amount
Accounts payable		326000
customer refunds payable		40000
salaries payable		41500
notes payable		300000
Equity
Kristina marbe capital	3449100	4292500
Retained earning	843400
Total Liabilities		5000000