Extreme Adventures, which uses the perpetual inventory system, has the following account balances (in alphabetical order) on July 31, 2014:
Accounts Payable ................................................. $ 21,600
Accounts Receivable ............................................... 23,200
Accumulated Amortization-Equipment ............. 64,600
Cash .......................................................................... 8,400
Cost of Goods Sold .............................................. 687,000
E. Buono, Capital .................................................. 402,000
E. Buono, Withdrawals............................................ 92,000
Equipment ............................................................. 180,000
Interest Earned .......................................................... 4,000
Inventory ............................................................... 143,000
Operating Expenses ............................................... 355,000
Sales Discounts ........................................................ 10,300
Sales Returns and Allowances ................................ 32,900
Sales Revenue ..................................................... 1,045,200
Supplies .....................................................................14,600
Unearned Sales Revenue ........................................... 9,000
For simplicity, all operating expenses have been summarized in the account Operating Expenses.
Additional data at July 31, 2014:
a. A physical count of items showed $3,000 of supplies on hand. (Hint: Use the account
Operating Expenses in the adjusting journal entry.)
b. An inventory count showed inventory on hand at July 31, 2014, of $136,800.
c. The equipment has an estimated useful life of eight years and is expected to have no value at the end of its life (Hint: Use the account Operating Expenses in the adjusting journal entry.)
d. Unearned sales revenue of $5,600 was earned by July 31, 2014.
Required
1. Record all adjustments and closing entries that would be required on July 31, 2014.
2. Prepare the financial statements of Extreme Adventures for the year ended July 31, 2014.