Transcribed Image Text:Save-Mart*
Save-Mart was a retail store. Its account balances on
February 28 (the end of its fiscal year), before adjust-
ments, were as shown below.
Debit Balances
Credit Balances
Accumulated depreciation on store equipment $
Cash
Accounts receivable
88,860
127,430
903,130
70,970
17,480
12,430
10,880
47,140
18,930
3,340
7,100
3,400
11,420
Merchandise inventory
Store equipment
Supplies inventory
Prepaid insurance
Selling expense
Sales salaries
Notes payable
Accounts payable
Common stock
88,500
88,970
100,000
33,500
988,700
Retained earnings
Sales
Miscellaneous general expense
Sales discounts
Interest expense
Social Security tax expense
Total
$1,311,090
Total
$1,311,090
The data for the adjustments are
1. Cost of merchandise sold, $604,783.
2. Store equipment had a useful life of seven years.
(All equipment was less than seven years old.)
3. Supplies inventory, February 28, $3,877. (Pur-
chases of supplies during the year were debited to
the Supplies Inventory account.)
4. Expired insurance, $7,125.
S. The note payable was at an interest rate of 9
cent, payable monthly. It had been outstanding
throughout the year.
6. Sales salaries earned but not paid to employces,
$2,340.
7. The statement sent by the bank, adjusted for checks
outstanding, showed a balance of $88,110. The dif-
ference represented bank service charges.
Questions
1. Set up T accounts with the balances given above.
2. Journalize and post adjusting entries, adding other
T accounts as necessary.
per-
3. Journalize and post closing entries.
4. Prepare an income statement for the year and a bal-
ance sheet as of February 28.
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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