Smooth Sailing Boat Supply uses the periodic inventory method. The adjusted trial balance of Smooth Sailing Boat Supply at December 31, 2025, follows:

Requirements 

1. Journalize the required closing entries at December 31, 2025. Assume ending Merchandise Inventory is $53,300. 

2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts and calculate their ending balances. 

3. How much was Smooth Sailing Boat Supply’s net income or net loss?

Transcribed Image Text:

SMOOTH SAILING BOAT SUPPLY Adjusted Trial Balance December 31, 2025 Account Title Cash Accounts Receivable Merchandise Inventory (beginning) Supplies Equipment Accumulated Depreciation Equipment Accounts Payable Salaries Payable Notes Payable, long-term Common Stock Retained Earnings Dividends Sales Revenue Sales Returns and Allowances Sales Discounts Interest Revenue Purchases Purchase Returns and Allowances Purchase Discounts Selling Expenses Administrative Expenses Total Balance Debit $ 3,700 15,700 44,700 8,800 59,900 60,700 1,900 2,100 274,600 38,700 20,900 $ 531,700 Credit $ 19,900 12,000 1,000 11,900 24,000 27,500 330,000 3,200 94,200 8,000 $ 531,700