The following information is from the unadjusted trial balance for Journey’s End Company prepared at October 31, 2023, the end of the fiscal year:

Rent and salaries expense are equally divided between the selling and administrative functions. Journey’s End Company uses a perpetual inventory system.

Required
1. Record adjusting entries for the following information:
a. Store supplies on hand at year-end amount to $6,600.
b. The balance in the Prepaid Insurance account represents 12 months of insurance that was in effect starting November 1, 2022.
c. The store equipment was purchased several years ago, when it was estimated to have a 20-year useful life and a resale value at the end of its life of $47,600.
d. A physical count of the ending merchandise inventory shows $29,800 of goods on hand.

2. Using adjusted trial balance numbers, prepare a multiple-step income statement (see Exhibit 5.14).

Analysis Component:
Explain why Interest Expense is shown under Other revenues and expenses on the multiple-step income statement.

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Cash.. Merchandise inventory.. Store supplies.... Prepaid insurance.. Store equipment...... Accumulated depreciation, store equipment.. Accounts payable.. Dallas End, capital.. Dallas End, withdrawals.. Sales.... Sales discounts... Sales returns and allowances.. Cost of goods sold.. Depreciation expense, store equipment.. Salaries expense.. Interest expense. Insurance expense.. Rent expense...... Store supplies expense.. Advertising expense... Totals.......... Debit $ 12,800 41,500 16,700 5,700 167,600 12,000 3,500 8,000 149,600 -0- 144,000 800 -0- Credit $ 60,000 34,700 172,100 391,000 56,000 -0- 39,600 $657,800 $657,800