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The fiscal year-end unadjusted trial balance for Collins Company is found on the trial balance tab. Collins Company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: depreciation expense—store equipment, sales salaries expense, rent expense—selling space, store supplies expense, advertising expense. It categorizes the remaining expenses as general and administrative.
Descriptions of items that require adjusting entries on January 31 follow.
A) Store supplies still available at fiscal year-end amount to $2,950.
B) Expired insurance, an administrative expense, for the fiscal year is $1,880.
C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.
D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.

Respuesta :

jepessoa

Missing information:

Cash 1,000  

Merchandise inventory 12,500  

Store supplies 5,800  

Prepaid insurance 2,400  

Store equipment 42,900  

Accumulated depreciation - Store equip.  15,250

Accounts payable  10,000

Common stock  5,000

Dividends 2,200  

Retained earnings  27,000

Sales  111,950

Sales discounts 2,000  

Sales returns and allowances 2,200  

Cost of goods sold 38,400  

Salaries expense 35,000  

Rent expense 15,000  

Advertising expense 9,800  

Total 169,200  169,200

Answer:

the closing entries should be:

Dr Sales revenues 107,750

    Cr Income summary 107,750

Dr Income summary 110,270

    Cr Cost of goods sold 39,340

    Cr Salaries expense 35,000

    Cr Rent expense 15,000

    Cr Advertising expense $9,800

    Cr Supplies expense 2,950

    Cr Insurance expense 1,880

    Cr Depreciation expense 6,300

   

Dr Retained earnings 2,520

    Cr Income summary 2,520

Dr Retained earnings 2,200

    Cr Dividends 2,200

Explanation:

A) Store supplies still available at fiscal year-end amount to $2,950.

Dr Supplies expense 2,950

    Cr Supplies 2,950

B) Expired insurance, an administrative expense, for the fiscal year is $1,880.

Dr Insurance expense 1,880

    Cr Prepaid insurance 1,880

C) Depreciation expense on store equipment, a selling expense, is $6,300 for the fiscal year.

Dr Depreciation expense 6,300

    Cr Accumulated depreciation - Store equip. 6,300

D) To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,560 of inventory is still available at fiscal year-end.

Dr Shrinkage expense or COGS (I prefer to use COGS) 940

    Cr Merchandise inventory 940

the adjusted income statement:

Revenues:

  • Sales                                         $111,950
  • Sales discounts                        ($2,000)  
  • Sales returns and allowances ($2,200)       $107,750

Cost of goods sold                                             ($39,340)

Gross profit                                                                   $68,410

Operating expenses:

  • Salaries expense                  ($35,000)  
  • Rent expense                        ($15,000)
  • Advertising expense              ($9,800)
  • Supplies expense                  ($2,950)
  • Insurance expense                 ($1,880)
  • Depreciation expense           ($6,300)             ($70,930)

Net loss                                                                        ($2,520)

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