Comprehensive Problem 2 Part 4 and 6: Note: You must complete parts 1, 2 and 3 before attempting to complete part 4 and part 6. Part 5 is an optional work sheet. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete Part 6. a. Merchandise inventory on May 31 $585,200 b. Insurance expired during the year 12,000 c. Store supplies on hand on May 31 4,000 d. Depreciation for the current year 14,000 e. Accrued salaries on May 31: Sales salaries $7,000 Office salaries 6,600 13,600 f. The adjustment for customer refunds and allowances is $60,000. 6. Journalize the adjusting entries. If an amount box does not require an entry, leave it blank. Post the adjusting entries to the attached spreadsheet you used in parts 1 and 2.

Relevant Question:

At the end of May, the following adjustment data were assembled.  

a. Merchandise inventory on May 31 $585,200

b. Insurance expired during the year 12,000

c. Store supplies on hand on May 31 4,000

d. Depreciation for the current year 14,000

e. Accrued salaries on May 31: Sales salaries $7,000 Office salaries 6,600 13,600

f. The adjustment for customer refunds and allowances is $60,000.

Stores Supplies at the beginning of May is $11,400.

Journalize the adjusting entries.  If an amount box does not require an entry, leave it blank.

Journal Entries:

a. No Journal Entry

b. Debit Insurance Expense $12,000

Credit Prepaid Insurance $12,000

To record the insurance expense for the year.

c. Debit Supplies Expense $7,400

Credit Store Supplies $7,400

To record the supplies expense ($11,400 - $4,000) for the year.

d. Debit Depreciation Expense $14,000

Credit Accumulated Depreciation $14,000

To record the depreciation expense for the year.

e. Debit Sales Salaries Expense $7,000

   Debit Office Salaries Expense $6,600

Credit Salaries Payable $13,600

To record the accrued salaries for the year.

f. Debit Customer Refunds and Allowances Expenses $60,000

Credit Customer Refunds and Allowances $60,000

To record the expense for customer refunds and allowances.

Explanation:

The journal entries record the business transactions as they occur daily.  Accounts are identified based on the accounting equation and the double-entry system of accounting.  For every transaction, two or more accounts are recorded, with some debited and others credited accordingly.