Exercise 5-10 Preparing adjusting and closing entries for a merchandiser LO P3

The following list includes selected permanent accounts and all of the temporary accounts from the December 31 unadjusted trial balance of Emiko Co., a business owned by Kumi Emiko. Emiko Co. uses a perpetual inventory system.

DebitCreditMerchandise inventory$34,000Prepaid selling expenses6,400K. Emiko, Withdrawals41,000Sales$561,000Sales returns and allowances19,100Sales discounts5,800Cost of goods sold228,000Sales salaries expense56,000Utilities expense19,000Selling expenses40,000Administrative expenses113,000

Additional Information

Accrued and unpaid sales salaries amount to $2,000. Prepaid selling expenses of $3,800 have expired. A physical count of year-end merchandise inventory is taken to determine shrinkage and shows $31,100 of goods still available.

(a)Use the aboveaccount balances along with the additional information, prepare the adjusting entries.

(b)Use the aboveaccount balances along with the additional information, prepare the closing entries.