accounts 3. Income Summary 775,220 Advertising Expense 12,580 Depreciation Expense-Building 120,000 Depreciation Expense-Office Furniture and equipment 20,500 Doubtful accounts expense 15,850 Freight in 5,210 Freight out 10,130 Interest Expense 7,520 Merchandise inventory, January 1, 2011 102,100 Office Supplies expense 4,120 Purchases 395,250 Office salaries 42,500 Sales discounts 9,230 Sales returns and allowances 3,580 Sales salaries 22,360 SSS and Philhealth Expense 4,290
To close expenses and other debit accounts in the income
Statement. (Merchandise Inventory, beginning 4. Income Summary 52,645
Myra, Capital 52,645
5. Myra, Capital 20,000
Myra, Drawings 20,000
Income Summary: debit credit
1. Merchandise Inventory, end 75,450 2. Sales and other credit accounts 752,415 3. Expenses and other debit accounts 775,220 ---------- ----------- Total 775,220 827,865 Balance (credit/net Income) 52,645 (4) ----------------------------------------------------------------------------------------------- Myra, Capital: Net Income 52,645 Drawings 20,000 Balance, December 31, 2011 32,645 EXERCISE 6-26
Adjusting Entries :
1. Doubtful Accounts Expense 3,450
Allowance for doubtful accounts 3,450
2. Depreciation Expense-Building 49,560
Accumulated Depreciation-Building 49,560
3. Depreciation Expense-Office Equipment 20,100
Accumulated Depreciation-Office Equipment 20,100
4. Interest Expense 3,000
Interest Payable 3,000 (Accrual of interest expense)
5. Prepaid Insurance 15,300
Insurance Expense 15,300 (Adjustment for prepayments using expense method) EXERCISE 6-26
Adjusting Entries :
6. Salaries Expense 9,600
Salaries Payable 9,600 (Accrual of salaries expense)
7. Interest Receivable 2,200
Interest Income 2,200 (Accrual of interest income)
8. Unearned Rent Income 10,000
Rent Income 10,000 (Adjustment on advance collection of income using liability method) EXERCISE 6-26
Reversing Entries ( adjustments on accrual of income and
expense; Prepaid expense using expense method, and advance collection of income using income method)
1-3 adjusting entries (doubtful accounts and depreciation
are not reversed) 4. Interest Payable 3,000 Interest Expense 3,000