Question

Note: You must complete parts 1, 2 and 3 before attempting to complete part 4 and part 6. Part 5 is an optional work sheet. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete Part 6. a. Merchandise inventory on May 31 $570,000 b. Insurance expired during the year 12,000 c. Store supplies on hand on May 31 4,000 d. Depreciation for the current year 14,000 e. Accrued salaries on May 31: Sales salaries $7,000 Office salaries 6,600 13,600 f. The adjustment for customer returns and allowances is $60,000 for sales and $35,000 for cost of merchandise sold. 6. Journalize the adjusting entries. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0". Post the adjusting entries to the attached spreadsheet you used in parts 1 and 2.

Answer 1

Answer:

adjusting entries:

insurance expense   12,000 debit

  prepaid insurance            12,000 credit

depreciation expense 14,000 debit

  accumulated depreciation PPE   14,0000 credit

salaries expense    13,600 debit

    sales salaries payable 7,000 credit

    office salaries payable 6,600 credit

merchandise inventory    35,000 debit

        accounts receivables            35,000 credit

Explanation:

a) We paid the insurnace policy in cahs at the beginning. Now after time past, insurance expires. We are going to recognize an expense for the expired insurance and decrease the amount we prepaid

b)we declare the depreciation expense and the accumuate depreciation for our property plant and equipment (notice if there is specifit account we should use an accumulated deprecaition for each concept)

c) we declare the expense for the accrued salaries to mach them with the accounting cycle they occur

d) we adjust for the returned inventory. the sales return and allowance would keep their balance as a contra-revenue to adjust for net sales in the net income statement.