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19 September, 18:59

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2017, unadjusted trial balance of Emiko Co. Use these account balances along with the additional information to journalize: a. Adjusting entriesb. Closing entries. Emiko Co. uses a perpetual inventory system. Debit CreditMerchandise inventory $30,000 Prepaid selling expenses 5,600 K. Emiko, Withdrawals 33,000 Sales $529,000Sales returns and allowances 17,500 Sales discounts 5,000 Cost of goods sold 212,000 Sales salaries expense 48,000 Utilities expense 15,000 Selling expenses 36,000 Administrative expenses 105,000 Additional Information: Accrued and unpaid sales salaries amount to $1,700. Prepaid selling expenses of $3,000 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $28,700 of goods still available.

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  1. 19 September, 19:22
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    Emiko Co.

    a) Adjusting Journal Entries:

    Debit Sales Salaries Expense $1,700

    Credit Sales Salaries Payable $1,700

    To record unpaid salaries expense.

    Debit Selling Expenses $3,000

    Credit Prepaid Selling Expenses $3,000

    To record expired expenses.

    b) Closing Journal Entries:

    Debit Income Summary $30,000

    Credit Beginning Inventory $30,000

    To close the beginning inventory to the Income Summary.

    Debit Sales $529,000

    Credit Sales Returns and Allowances $17,500

    Credit Sales Discount $5,000

    Credit Income Summary $506,500

    To close sales, sales returns & allowances & discount.

    Debit Income Summary $212,000

    Credit Cost of goods sold $212,000

    To close cost of goods sold to the income summary.

    Debit Income Summary $208,700

    Credit Sales Salaries $49,700

    Credit Utilities $15,000

    Credit Selling expenses $39,000

    Credit Administrative expenses $105,000

    To close expenses to the income summary.

    Explanation:

    Adjusting journal entries are often used to make some changes in the accounts at the end of the reporting period in order to ensure that transactions are reported on the accrual basis. Entries made under this journal are usually accrued expenses and income, prepaid expenses and deferred revenue, depreciation charges.

    On the other hand, closing journal entries are used to differentiate the temporary accounts from the permanent accounts. Temporary accounts are closed at the end of the accounting period to the Income Summary. Permanents accounts are carried over to the next accounting period. Their accounts make up the balance sheet and their opening balances of the next reporting period.
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