Question

Cash	800
Accounts Receivable	700
Allowance for Doubtful Acc,		20
Inventory	500
Supplies	200
Equipment	6,600
Accum. Dep.: Equipment		2,000
Accounts Payable		600
Notes Payable		1,000
Common Stock		2,200
Retained. Earnings		1,380
Dividends	900
Sales Revenue		7,000
Cost of Goods Sold	3,200
Salaries Expense	1,000
Sales Comm. Expense	300
Totals	14,200	14,200

	INSTRUCTIONS
A	Enter the adjustments onto the worksheet and complete the worksheet.
B	Prepare the CLOSING JOURNAL ENTRIES for the period.
	ADJUSTMENT DATA
1	Pumpkin Company estimates that 6% of gross accounts receivable will be uncollectible.
2	Depreciation is calculated using the straight-line method, with a 5 year life and $300 salvage value.
3	Sales commissions are 10% of sales. Commissions on sales during the last week of December
	have not been paid as of December 31.
4	The note was issued on October 1, bearing interest at 10%, due February 1, 2021.
5	A physical inventory of supplies indicated $70 of supplies still on hand.

Answer 1

A.

Adjusted Trial Balance for the Year

Accounts	Debit	Credit
Cash	800
Accounts Receivable	700
Allowance for Doubtful Account		42
Inventory	500
Supplies	130
Supplies In Hand	70
Equipment	6600
Accumulated Dep: Equipment		3260
Accounts Payable		600
Notes Payable		1000
Common Stock		2200
Retained Earnings		1380
Dividends	900
Sales Revenue		7000
Cost of Goods Sold	3200
Salaries Expense	1000
Sales Commission Expenses	700
Bad Debt	22
Sales Commission Payable		400
Interest Payable		25
Depreciation	1260
Interest	25
Totals	15907	15907

Working Note:

1. 700X6%= $42 is Uncollectible. Adjust Allowance Amount To $42 and Balance amount $22 (42-20) Treated As Bad Debt( Debit Side).

2. Depreciation For Equipment:

6600-300(Salvage Value)/5 Years= $1260 Is Depreciation For The Year.Add With Accumulated Depreciation Credit Side and Provide Depreciation Account in debit Side.

3. Commission For The Year= 7000X10%= $700

Commission Payable= 700-300(As per Trial Balance before Adjustment) = $400.

Commissin Payable Shown in Credit Side $400 and Commission Expense $400 add with before adjustment balance (400+300).

4. Interest Payable= 1000X10%X3/12= $25 ( Oct to Dec)

Interest Payable $25 in Credit Side and And As Interest Expense $25 in Debit Side.

5. Physical Inventory of Supplies in hand $70 And Balance $130 Treated As Supllies.

B.

Closing Entries For The Year

Particulars	Debit	Credit
Sales A/C	7000
Dividends	900
Profit&Loss A/C		7900
	7900	7900
Profit&Loss A/C	6207
Supplies		130
Cost of Goods sold		3200
Salaries Expense		1000
Sales Commission		700
Bad Debt		22
Depreciation		1260
Interest		25
	6337	6337