Question

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	$	33,000
Prepaid selling expenses		6,200
K. Emiko, Withdrawals		39,000
Sales				$	553,000
Sales returns and allowances		18,700
Sales discounts		5,600
Cost of goods sold		224,000
Sales salaries expense		54,000
Utilities expense		18,000
Selling expenses		39,000
Administrative expenses		111,000

Additional Information

Accrued and unpaid sales salaries amount to $1,800. Prepaid selling expenses of $3,600 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $30,500 of goods still available.

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

Answer 1

Date	General Journal	Debit	Credit
Dec 31	Sales salaries expense	1800
	Salaries payable		1800
Dec 31	Selling expenses	3600
	Prepaid selling expenses		3600
Dec 31	Cost of goods sold	2500		=33000-30500
	Merchandise inventory		2500
b
Date	General Journal	Debit	Credit
Dec 31	Sales	533000
	Income summary		533000
Dec 31	Income summary	478200
	Sales returns and allowances		18700
	Sales discounts		5600
	Cost of goods sold		226500	=224000+2500
	Sales salaries expense		55800	=54000+1800
	Utilities expense		18000
	Selling expenses		42600	=39000+3600
	Administrative expenses		111000
Dec 31	Income summary	54800		=533000-478200
	K. Emiko, Capital		54800
Dec 31	K. Emiko, Capital	39000
	K. Emiko, Withdrawals		39000