Colorful Clothing is a retailer in Atlanta, Georgia. The company sells gift cards and records the cash received in the Unearned Sales Revenue account. Presented below is the unadjusted trial balance for Colorful Clothing as of December 31, 2022.

Adjustment data:
1. Customers used gift cards to purchase merchandising totalling $3,000.
2. Inventory actually on hand is $36,500.

Instructions
a. Journalize the adjusting entries.
b. Prepare a multiple-step income statement.
c. Journalize the closing entries.

Transcribed Image Text:

Colorful Clothing Unadjusted Trial Balance December 31, 2022 Debit Credit $ 26,000 Cash Accounts Receivable 6,000 Inventory 37,000 $ 5,000 Accounts Payable Unearned Sales Revenue 4,000 Owner's Capital 54,000 Owner's Drawings 4,000 Sales Revenue 252,000 3,000 Sales Returns and Allowances Sales Discounts 2,000 Interest Revenue 1,000 Cost of Goods Sold 134,000 Advertising Expense 8,000 Salaries and Wages Expense 62,000 Rent Expense 25,000 Utilities Expense 9,000 Totals $316,000 $316,000