Concept explainers
1.
Journalize the
1.
Explanation of Solution
Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and
Pass the adjusting entry for the given transaction:
General Journal | Page - 25 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
December 31 | Income Summary | $16,985 | ||
Merchandise Inventory | $16,985 | |||
(To record the beginning inventory) | ||||
December 31 | Merchandise Inventory | $15,840 | ||
Income Summary | $15,840 | |||
(To record the closing inventory) | ||||
December 31 | Uncollectible Accounts Expense | $1,280 | ||
Allowance for Doubtful Accounts | $1,280 | |||
(To record the estimated loss on the net credit sale) | ||||
December 31 | Supplies Expense | $505 | ||
Supplies | $505 | |||
(To record the Supplies used) |
Table (1)
General Journal | Page - 26 | |||
Date | Description | Post Ref. | Debit | Credit |
2019 | ||||
December 31 | Insurance expense | $1,200 | ||
Prepaid Insurance | $1,200 | |||
(To record the prepaid insurance) | ||||
December 31 | $1,000 | |||
$1,000 | ||||
(To record the depreciation on equipment) | ||||
December 31 | Depreciation Expense - Store Fixtures | $2,050 | ||
Accumulated Depreciation - Store Fixtures | $2,050 | |||
(To record the depreciation on equipment) | ||||
December 31 | Interest expense | $90 | ||
Interest Payable | $90 | |||
(To record the interest payable) | ||||
December 31 | Salaries Expense | $1,450 | ||
Salaries Payable | $1,450 | |||
(To record the salaries payable) | ||||
December 31 | Payroll Taxes Expense | $192.13 | ||
Federal | $8.70 | |||
State Unemployment Tax Payable | $72.50 | |||
Social Security Tax Payable | $89.90 | |||
Medicare Tax Payable | $21.03 | |||
(To record the taxes on accrued wages) |
Table (2)
2.
Journalize the closing entries as on December 31, 2019.
2.
Explanation of Solution
Closing entries: The journal entries prepared to close the temporary accounts to
Pass the closing entries:
General Journal | Page - 27 | |||
Date | Description | Post Ref | Debit | Credit |
2019 | ||||
December 31 | Sales | $236,560 | ||
Purchases Returns and allowances | $2,000 | |||
Income Summary | $238,560 | |||
(To record the closing entry for the income) | ||||
December 31 | Income Summary | $47.87 | ||
PA Capital | $47.87 | |||
(To record the closing entry for the capital) | ||||
December 31 | PA Capital | $8,000 | ||
PA Drawings | $8,000 | |||
(To record the closing entry for the capital) |
Table (3)
General Journal | Page - 28 | |||
Date | Description | Post Ref | Debit | Credit |
2019 | ||||
December 31 | Income Summary | $237,367.13 | ||
Sales Returns and Allowances | $6,000 | |||
Purchases | $160,000 | |||
Rent Expense | $18,000 | |||
Telephone Expense | $2,400 | |||
Salaries Expense | $41,450 | |||
Payroll Taxes Expense | $3,392.13 | |||
Supplies Expense | $505 | |||
Insurance expense | $1,200 | |||
Depreciation Expense - Store Equipment | $1,000 | |||
Depreciation Expense - Store Fixtures | $2,050 | |||
Uncollectible Accounts Expense | $1,280 | |||
Interest Expense | $90 | |||
(To record the closing entry for the expenses) |
Table (4)
3.
Journalize the reversing entries as on January 1, 2020 and identify the
3.
Explanation of Solution
Reversing entries: Reversing entries are those entries which are recorded at the beginning of the year, to reverse or set right the adjusting entries made in the end of the previous accounting year, in order to maintain the records according to accrual basis principle.
Pass the reversing entries:
General Journal | Page - 29 | |||
Date | Description | Post Ref | Debit | Credit |
2020 | ||||
January 1 | Interest Payable | $90 | ||
Interest Expense | $90 | |||
(To record the reversing entry for interest payable) | ||||
January 1 | Salaries Payable | $1,450 | ||
Salaries Expense - Office | $1,450 | |||
(To record the reversing entry for salaries payable) | ||||
January 1 | Social Security Tax Payable | $89.90 | ||
Medicare Tax Payable | $21.03 | |||
Federal Unemployment Tax Payable | $8.70 | |||
State Unemployment Tax Payable | $72.50 | |||
Payroll Taxes Expense | $192.13 | |||
(To record the reversing entry for payroll taxes payable) |
Table (5)
General Journal | Page - 30 | |||
Date | Description | Post Ref | Debit | Credit |
2020 | ||||
January 4 | Salaries Payable | $1,450 | ||
Salaries Expense | $1,150 | |||
Cash | $2,600 | |||
(To record the payment of salaries ignoring the payroll taxes) |
Table (6)
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Chapter 13 Solutions
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