7. The following list includes selected permanent accounts and all of the tempor

Question

7. The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co.. Emiko Co. uses a perpetual inventory system.

Additional Information

Accrued sales salaries amount to $1,900. Prepaid selling expenses of $3,700 have expired. A physical count of year-end merchandise inventory shows $30,800 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 $ 33,500 Prepaid selling expenses 6,300 Dividends 40,000 Sales $ 557,000 Sales returns and allowances 18,900 Sales discounts 5,700 Cost of goods sold 226,000 Sales salaries expense 55,000 Utilities expense 18,500 Selling expenses 39,500 Administrative expenses 112,000

Explanation / Answer

Part A

Part B

Event date general journal debit credit 1 dec 31 sales Salaries expense 1900 Salaries payable 1900 2 dec 31 selling expense 3700 Prepaid selling expense 3700 3 dec 31 cost of goods sold 2700 Merchandise inventory (33500-30800) 2700

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