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In: Accounting

The following list includes selected permanent accounts and all of the temporary accounts from the December...

The following list includes selected permanent accounts and all of the temporary accounts from the December 31 unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system.

Debit Credit
Merchandise inventory $ 32,500
Prepaid selling expenses 6,100
Dividends 38,000
Sales $ 549,000
Sales returns and allowances 18,500
Sales discounts 5,500
Cost of goods sold 222,000
Sales salaries expense 53,000
Utilities expense 17,500
Selling expenses 38,500
Administrative expenses 110,000


Additional Information

Accrued and unpaid sales salaries amount to $1,700. Prepaid selling expenses of $3,500 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $30,200 of goods still available.

(a) Use the above account balances along with the additional information, prepare the adjusting entries.

  • 1

    Accrued and unpaid sales salaries amount to $1,700.

  • 2

    Prepaid selling expenses of $3,500 have expired.

  • 3

    A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $30,200 of goods still available.

(b) Use the above account balances along with the additional information, prepare the closing entries.

  • 1

    Record closing of credit balances in temporary accounts.

  • 2

    Record closing of debit balances in temporary accounts.

  • 3

    Record closing of income summary account.

  • 4

    Record closing of dividends account.

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