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Exercise 6-25; 6-26

• Closing Entries
• Reversing Entries
6-25

1) Merchandise Inventory, end 75,450

Income Summary 75,450


To take up merchandise inventory, end

2) Interest Income 12,800

Purchase discount 5,405

Purchase returns and allowances 9,110

Sales 725,100

Income Summary 752,415

To close sales and other credit/revenue


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

5. Insurance Expense 15,300


Prepaid Insurance 15,300

6. Salaries Payable 9,600


Salaries Expense 9,600

7. Interest Income 2,200


Interest Receivable 2,200

8. Liability method, no reversing entry


Exercise 6-25; 6-26
• Closing Entries
• Reversing Entries