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

Question

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2015, unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co uses a perpetual inventory system DebitCredt $30,000 5,600 33,000 Merchandise inventory Prepaid selling expenses K. Emiko, Withdrawals Sales Sales returns and allowances Sales discounts Cost of goods sold Sales salaries expense Utilities expense Selling expenses Administrative expenses $529,000 17,500 5,000 212,000 48,000 15,000 36,000 105,000

Explanation / Answer

Adjusting entries: Date Account Titles and Explanation Debit Credit Dec 31. Sales salaries expense 1700 Salaes salaries payable 1700 (Sales salaries accrued) Dec 31. Selling expense 3000 Prepaid selling expenses 3000 (Seliing expenses have expired) Dec 31. Cost of goods sold (30000-28450) 1550 Merchandise inventory 1550 (Shortage in inventory adjusted) Closing entries: Date Account Titles and Explanation Debit Credit Dec 31. Sales 529000 Income summary 529000 (Closed revenue accounts) Dec 31. Income summary 444750 Sales returns and allowances 17500 Sales discounts 5000 Cost of goods sold (212000+1550) 213550 Sales salaries expense (48000+1700) 49700 Utilities expense 15000 Selling expense (36000+3000) 39000 Administrative expense 105000 (Closed expense accounts) Dec 31. Income summary 84250 Retained earnings 84250 (Balance in income summary transferred)

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