Adjusting And Closing Entries

Smith Manufacturing, Inc. has asked that you assist with some bookkeeping services. The company is nearing year-end and needs help to prepare adjusting and closing entries. Following is the information that you need to prepare the entries:

  • Bad debts are estimated at 1% of Net Sales.
  • There is an $8,000 balance of unexpired insurance in the Prepaid Insurance account.
  • A physical inventory determined that there is $40,000 balance in inventory.
  • Buildings are depreciated on a straight-line basis over 20 years, no salvage value.
  • Equipment is depreciated on a straight-line basis over ten years, no salvage value.
  • All interest remained unpaid at year-end.
  • There was $2,000 in salaries payable at year-end.

Download the following trial balance for Smith Manufacturing, Inc. to assist in your preparation of the adjusting and closing entries.

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