The following is the December 31 trial balance of New York Boutique.

Instructions

a. Construct T-accounts and enter the balances shown.

b. Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.) Open additional T-accounts as necessary. The books are closed yearly on December 31.

1. Bad debt expense is estimated to be €1,400.

2. Equipment is depreciated based on a 7-year life (no residual value).

3. Insurance expired during the year, €2,550.

4. Interest accrued on notes payable, €3,360.

5. Salaries and wages earned but not paid, €2,400.

6. Advertising paid in advance, €700.

7. Office supplies on hand, €1,500, charged to Office Expense when purchased.

c. Prepare closing entries and post to the accounts.

Transcribed Image Text:

New York Boutique Trial Balance December 31 Debit Credit Cash € 18,500 Accounts Receivable 32,000 Allowance for Doubtful Accounts € 700 Inventory, December 31 80,000 Prepaid Insurance 5,100 Equipment 84,000 Accumulated Depreciation-Equipment 35,000 Notes Payable 28,000 Share Capital-Ordinary 80,600 Retained Earnings 10,000 Sales Revenue 600,000 Cost of Goods Sold 408,000 Salaries and Wages Expense Advertising Expense 115,000 6,700 Office Expense 5,000 €754,300 €754,300