The balance sheet of Taos Promotion includes the amounts shown below. Analysis o

Question

The balance sheet of Taos Promotion includes the amounts shown below. Analysis of the company's records reveals the following transactions during 2017, the company's first year of operations:

$311,475

$ 43,500

$ 28,100

Analysis of the company’s balance sheet accounts reveals that at year-end, supplies on hand total $7,950, employees have earned $12,000 but have not yet been paid, and on the last day of the fiscal year, customers paid deposits of $22,050 for future promotions (this is included in total cash received from customers, above).

Required:
Prepare journal entries to adjust the account balances for revenue, supplies expense and salary expense for the year-end. Prepare closing entries.

Cash received from customers, recorded as service revenue

$311,475

Purchase of supplies for cash, expensed

$ 43,500

Cash paid for salaries, expensed

$ 28,100

Explanation / Answer

General Journal Debit Credit Service revenue $22,050 Unearned revenue $22,050 (To record unearned revenue for deposits received from customers) Supplies inventory $7,950 Supplies expense $7,950 (To record supplies on hand at year-end) Salaries expense $12,000 Salaries payable $12,000 (To record unpaid wages at year-end) Service revenue $289,425 Retained earnings $289,425 (To close revenues at year-end) Retained earnings $35,550 Supplies expense $35,550 (To close supplies expense at year-end) Retained earnings $40,100 Salaries expense $40,100 (To close salaries expense at year-end)

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