I need help creating a closing entry journal sheet including; I have added all t
ID: 2460437 • Letter: I
Question
I need help creating a closing entry journal sheet including;
I have added all the information I have on the firm.
General Information
a. On April 1, 2013 a 24-month insurance policy was purchased for $24,000.
b. On January 1, 2013 Hullie & Oates paid Gretsky Advertising $48,000 for three years of advertising services. Equal services are provided each year.
c. Hullie & Oates needed some additional storage space so on November 1, 2013 they rented a unit for an annual rate of $18,500. The entire amount was expensed when paid.
d. $5,800 of store supplies were purchased during the year and the asset store supplies was increased. $3,200 of these supplies were used during the year.
e. $7,775 of office supplies were purchased during the year and were immediately expensed. $1,250 of these supplies remained at the end of 2013.
f. On July 1, 2013, Hullie & Oates issued a 9-month note receivable to Shanahan Co. at an annual interest rate of 6%. Principle and interest will be paid at the end of the 9-months. The note was recorded in Notes Receivable and is the only note outstanding.
g. Depreciation for the year is based on the following:
- Straight line depreciation
- Store equipment – Assets were held for the entire year; Residual Value = $10,000; Service life is estimated to be 10 years.
- Office equipment – Assets were held for the entire year; Residual Value = $7,000; Service life is estimated to be 3 years.
h. Sales salaries of $8,400 and office salaries of $6,500 remained unpaid at 12/31/13.
i. On October 1, 2013, Hullie & Oates rented a portion of one store to Twist & Chase Co. The contract was for 6 months and Hullie & Oates required the 6 months of cash upfront on October 1st. The rent is being earned equally over the next 6 months. When cash was received, unearned rent was appropriately recorded.
j. The note payable was outstanding the entire year and a 6.5% interest rate exists on the note. No interest has been recorded for the year.
k. Based on past experience, Hullie & Oates calculates bad debt expense at 1% of net sales for the year.
worksheet:
Journal Entires
Acount Titles and Explanation DR CRExplanation / Answer
Closing entries
Debit
Credit
Sales
788,350
Interest revenue
12,000
To income summary
$800,350
Income summary
$754,404
To Sales return and allowances
12,800
To Sales discounts
8,300
To Sales salaries expense
103,050
Advertising expense
16,000
Depreciation – store equipment
34,000
Store supplies expense
3,200
Office salaries expense
40,500
Rent expense
3,083
Insurance expense
9,000
Depreciation –office equipment
39,333
Office supplies expense
6,525
Miscellaneous administrative expense
1,650
Bad debt expense
7,673
Interest expense
9,490
Cost of goods sold
457,200
Income summary
$45,946
To Retained earnings
$45,946
Debit
Credit
Sales
788,350
Interest revenue
12,000
To income summary
$800,350
Income summary
$754,404
To Sales return and allowances
12,800
To Sales discounts
8,300
To Sales salaries expense
103,050
Advertising expense
16,000
Depreciation – store equipment
34,000
Store supplies expense
3,200
Office salaries expense
40,500
Rent expense
3,083
Insurance expense
9,000
Depreciation –office equipment
39,333
Office supplies expense
6,525
Miscellaneous administrative expense
1,650
Bad debt expense
7,673
Interest expense
9,490
Cost of goods sold
457,200
Income summary
$45,946
To Retained earnings
$45,946
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