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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Journalize the required adjusting entries for the year ended December 31 for Butler Spa and Pool Accessories. Butler Spa and Pool Accessories uses the periodic inventory system.

a–b. On December 31, a physical count of inventory was taken. The physical count amounted to $22,624. The Merchandise Inventory account shows a balance of $21,696.

c. On July 1 of this year, $2,400 was paid for a one-year insurance policy.

d. On November 1 of this year, $420 was paid for three months of advertising.

e. As of December 31, the balance of the Unearned Membership Fees account is $15,600. Of this amount, $9,200 has been earned.

f. Equipment purchased on May 1 of this year for $8,000 is expected to have a useful life of five years with a trade-in value of $500. All other equipment has been fully depreciated. The straight-line method is used.

g. As of December 31, three days’ wages at $250 per day had accrued.

h. As of December 31, the balance of the supplies account is $4,200. A physical inventory of the supplies was taken, with an amount of $1,650 determined to be on hand.

To determine

Journalize the adjusting entries using periodic inventory system for B Spa as on 31st December.

Explanation

Periodic inventory system: The method or system of recording the transactions related to inventory occasionally or periodically are referred to as periodic inventory system.

Journalize the adjusting entries.

...
General journalPage:
DateDescriptionPost ref.Debit ($)Credit($)
20___ Adjusting entries   
December.31Income summary 21,696 
(a)      Merchandise inventory  21,696
   (To record the beginning merchandise inventory)   
      
(b)31Merchandise inventory 22,624 
      Income summary  22,624
   (To record the adjusted ending merchandise inventory)   
      
(c)31Insurance expense 1,200 
      Prepaid insurance  1,200
   (To record the expired insurance)   
      
(d)31Advertising expense 280 
      Prepaid advertising  280
   (To record the expired advertising expense)   
      
(e)31Unearned membership fees 9,200 
       Membership fees income  9,200
   (To record the accrued membership fees)   
      
(f)31Depreciation expense, equipment 1,000 
      Accumulated depreciation, equipment  1,000
   (To record the depreciation on equipment)

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