Question

Axle Gear Company produced the following trial balance at the end of December 2019: Axle Gear Company Trial Balance 12/31/19 Cash 8,500 Accounts receivable 32,000 Allowance for uncollectible accounts 480 Inventory 90,000 Prepaid insurance 4,880 Equipment 84,000 Accumulated depreciation 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 115,000 Advertising expense 6,700 Supplies expense 5,000 754,080 754,080 Required: • Based on the following information, prepare the adjusting entries required by Axle for 2019. • Equipment is depreciated on a straight-line basis over seven years; no salvage value is expected. • On 3/1/19, Axle acquired a two-year insurance policy and recorded it in a permanent account. • The three-year, 5% notes payable were issued on 4/1/19; interest is payable annually on 4/1. • Salaries and wages are paid every Friday, the last payment in 2019 occurring on Friday, December 27th. The weekly payroll has running about $2,400. • Axle ordered web advertising for December, January, and February, which ran in December. The invoice for $1,500 ($500 per month) has not been recorded yet. • At the end of December, there were $1,500 of office supplies still on hand; they had been charged to Supplies expense when purchased. • Prepare the adjusted trial balance at 12/31/19. • Prepare closing entries for 2019.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Adjusting Entries:					Trial balance:
						Unadjusted		Adjustments		Adjusted
Event	Account	Debit	Credit		Account	Debit	Credit	Debit	Credit	Debit	Credit
a	Depreciation Expense	$      12,000			Cash	$             8,500				$             8,500
	Accumulated Depreciation		$      12,000		Accounts Receivable	$           32,000				$           32,000
	$84,000/7 Years				Allowance for uncollectible accounts		$                 480				$                 480
					Office Supplies			$             1,500		$             1,500
b	Insurance Expense	$        2,033			Inventory	$           90,000				$           90,000
	Prepaid Insurance		$        2,033		Prepaid Insurance	$             4,880			$             2,033	$             2,847
	$4,880/24*10				Equipment	$           84,000				$           84,000
					Accumulated Depreciation		$           35,000		$           12,000		$           47,000
c	Interst Expense	$        1,050			Note Payable		$           28,000				$           28,000
	Interest Payable		$        1,050		Interst Payable				$             1,050		$             1,050
	$28,000*5%*9/12				Salaries and Wages Payable				$                 960		$                 960
					Accounts Payable				$             1,500		$             1,500
d	Salaries and wages expense	$            960			Common Stock		$           80,600				$           80,600
	Salaries and wages payable		$            960		Retained Earning		$           10,000				$           10,000
	$2,400/5*2				Sales Revenue		$        600,000				$        600,000
					Cost of Goods Sold	$        408,000				$        408,000
e	Advertising Expense	$        1,500			Salaries and Wages Expense	$        115,000		$                 960		$        115,960
	Accounts Payable		$        1,500		Advertising Expense	$             6,700		$             1,500		$             8,200
					Supplies Expense	$             5,000			$             1,500	$             3,500
f	Office Supplies	$        1,500			Interst Expense			$             1,050		$             1,050
	Supplies Expense		$        1,500		Insurance Expense			$             2,033		$             2,033
					Depreciation Expense			$           12,000		$           12,000
Closing Entries:
					Total	$        754,080	$        754,080	$           19,043	$           19,043	$        769,590	$        769,590
Event	Account	Debit	Credit
c1	Sales Revenue	$   600,000
	Income Summary		$   600,000
	(To close sales revenue accounts)
c2	Income Summary	$   550,743
	Cost of Goods Sold		$   408,000
	Salaries and Wages Expense		$   115,960
	Advertising Expense		$        8,200
	Supplies Expense		$        3,500
	Interst Expense		$        1,050
	Insurance Expense		$        2,033
	Depreciation Expense		$      12,000
c3	Income Summary	$      49,257
	Retained Earning		$      49,257