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P3-9 Answer and Step-by-Step Solution - Nancy Drew Boutique

(Adjusting and Closing) Presented below is the December 31 trial balance of Nancy Drew Boutique.

Instructions

  1. Construct T-accounts and enter the balances shown.
  2. Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.) Open additional T-accounts as necessary. (The books are closed yearly on December 31.)
    1. Bad debts are estimated to be $1,400.
    2. Furniture and equipment is depreciated based on a 6-year life (no salvage value).
    3. Insurance expired during the year $2,550.
    4. Interest accrued on notes payable $3,360.
    5. Sales salaries earned but not paid $2,400.
    6. Advertising paid in advance $700.
    7. Office supplies on hand $1,500, charged to Office Expense when purchased.
  3. Prepare closing entries and post to the accounts.

P3-9 Solution - Nancy Drew Boutique -

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