The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2011, unadjusted trial balance of Deacon Co., a business owned by Julie Deacon. Deacon Co. uses a perpetual inventory system. Debit Credit Merchandise inventory $ 26,200 Prepaid selling expenses 5,500 Dividends 2,200 Sales $ 471,600 Sales returns and allowances 17,921 Sales discounts 5,018 Cost of goods sold 232,027 Sales salaries expense 51,876 Utilities expense 15,091 Selling expenses 40,558 Administrative expenses 104,224 Additional Information Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,200 have expired. A physical count of year-end merchandise inventory shows $25,702 of goods still available. (a) Use the above account balances along with the additional information, prepare the adjusting entries

The following list includes selected permanent accounts and all of the temporary accounts from the December 31, 2011, unadjusted trial balance of Deacon Co., a business owned by Julie Deacon. Deacon Co. uses a perpetual inventory system.

     

		Debit		Credit
Merchandise inventory	$	26,200
Prepaid selling expenses		5,500
Dividends		2,200
Sales			$	471,600
Sales returns and allowances		17,921
Sales discounts		5,018
Cost of goods sold		232,027
Sales salaries expense		51,876
Utilities expense		15,091
Selling expenses		40,558
Administrative expenses		104,224

     

Additional Information

Accrued sales salaries amount to $1,700. Prepaid selling expenses of $2,200 have expired. A physical count of year-end merchandise inventory shows $25,702 of goods still available.

            (a)

Use the above account balances along with the additional information, prepare the adjusting entries.

 

(b)

Use the above account balances along with the additional information, prepare the closing entries.

 

Explanation:

(a)

To record inventory shrinkage ($26,200 − $25,702) = $498.

(b)

Cost of goods sold ($232,027 + $498) = $232,525.

Sales salaries expense ($51,876 + $1,700) = $53,576.

Selling Expenses ($40,558 + $2,200) = $42,758.