Question

The unadjusted trial balance of Ayayai Enterprises for the year ending December 31, 2021, follows:

AYAYAI ENTERPRISES Trial Balance December 31, 2021
		Debit		Credit
Cash		$15,000
Accounts receivable		19,200
Merchandise inventory		37,050
Prepaid insurance		3,000
Supplies		2,950
Equipment		150,000
Accumulated depreciation—equipment				$35,000
Furniture		45,000
Accumulated depreciation—furniture				18,000
Accounts payable				33,200
Unearned revenue				4,000
Mortgage payable				125,000
S. Kim, capital				46,200
S. Kim, drawings		48,000
Sales				265,000
Sales returns and allowances		2,500
Sales discounts		3,275
Cost of goods sold		153,000
Interest expense		6,875
Salaries expense		35,450
Utilities expense		5,100
		$526,400		$526,400

Additional information:

1.		There is $750 of supplies on hand on December 31, 2021.
2.		The one-year insurance policy was purchased on March 1, 2021.
3.		Depreciation expense for the year is $10,300 for the equipment and $4,500 for the furniture.
4.		Accrued interest expense at December 31, 2021, is $700.
5.		Unearned revenue of $800 is still unearned at December 31, 2021. On the sales that were earned, cost of goods sold was $2,650.
6.		A physical count of merchandise inventory indicates $32,050 on hand on December 31, 2021.
7.		Global uses the perpetual inventory system and the earnings approach. part 1 Prepare the adjusting journal entries assuming they are prepared annually. part 2 Prepare a multiple-step income statement part 3Prepare a single-step income statement part 4 Prepare the closing entries.

Answer 1

Preparing the adjusting journal entries assuming they are prepared annually

Serial No	Particulars	Debit($)	Credit($)
1	Supplies Expenses($2950-750)	2200
	Supplies		2200
2	Insurance Expense(3000*10/12)	2500
	Prepaid Insurance		2500
3	Depreciation Expense	14800
	Accumulated Dep- Furniture		4500
	Accumulated Dep-E quipment		10300
4	Interest Expense	700
	Interest Payable		700
5	Unearned revenue(4000-800)	3200
	Sales		3200
6	COGS	2650
	Merchandise Inventory		2650

Preparing a multiple-step income statement

Revenue:	($)	($)
Sales($265,000+3200)	$268,200
Sales Return and Allowance	($2500)
Sales Discount	($3275)
Net Sales		262,425
Less:Cost of Good Sold		($155650)
Gross Profit		$106775
Less: Expenses
Interest Expenses(6,875+700)	7575
Salaries Expenses	35450
Utilities Expenses	5100
Depreciation Expenses	14800
Insurance Expenses	2500
Supplies Expenses(2950-750)	2200	$67625
Net Income		$39150

Preparing a single-step income statement

Revenue:
Sales($265,000+3200)		$268,200
Less:Cost of Good Sold	155650
Interest Expenses(6,875+700)	7575
Salaries Expenses	35450
Utilities Expenses	5100
Depreciation Expenses	14800
Insurance Expenses	2500
Supplies Expenses(2950-750)	2200
Sales Return and Allowance	2500
Sales Discount	3275	$229050
Net Income		$39150

Preparing the closing entries.

Serial No	Particulars	Debit($)	Credit($)
1	Sales Account	262,425
	Income Summary		262,425
2	Income Summary	$223,275
	Cost of Good Sold		$155650
	Interest Expenses		7575
	Salaries Expenses		35,450
	UtilitiesExpenses		5,100
	DepreciationExpenses		14,800
	Insurance Expenses		2,500
	Supplies Expenses		2,200
3	Income Summary(262,425-223,275)	39,150
	S Kim Capital Account		39,150
4	S Kim Capital Account	48,000
	S Kim Drawing		48,000