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, 2017, unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system.

Additional Information

Accrued sales salaries amount to $1,600. Prepaid selling expenses of $3,400 have expired. A physical count of year-end merchandise inventory shows $29,900 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.

Debit Credit Merchandise inventory $ 32,000 Prepaid selling expenses 6,000 K. Emiko, Withdrawals 37,000 Sales $ 545,000 Sales returns and allowances 18,300 Sales discounts 5,400 Cost of goods sold 220,000 Sales salaries expense 52,000 Utilities expense 17,000 Selling expenses 38,000 Administrative expenses 109,000

Explanation / Answer

EMIKO CO.

(A). ADJUSTING ENTRIES

B. CLOSING ENTRIES

After these entries all temprorery accounts will have zero balance and all permanent acccount like inventory, prepaid expenses accrued salaries and retained earning will be reflected in balance sheet with there balances.

Date Account Debit Credit 12/31 Sales Salary Expenses 1600 Accrued Salary Expenses 1600 (Sales salary payable accounted) 12/31 Selling Expenses 3400 Prepaid Selling Expenses 3400 (Selling expenses accounted through prepaid selling exps.) 12/31 Inventory Loss (Shortage) 2100 Inventory 2100 (Difference between book inventory of $32000 and physical inventory of $29900 writtten off as loss)

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