Merchandising:

Complete accounting cycle

Date Particulars Debit Credit

2022
Dec. Depreciation expense - delivery equipment 50,000
Depreciation expense - store equipment 15,000
Depreciation expense - office equipment 5,000
Accumulated depreciation - delivery equipment 50,000
Accumulated depreciation - store equipment 15,000
Accumulated depreciation - office equipment 5,000

Sales salary expense 5,000

Rent expense 10,000
Sales salaries payable 5,000
Rent payable 10,000

Office supplies 500

Office supplies expense 500

Bad debts expense 25,500

Allowance for bad debts 25,500

Interest receivable 250

Interest income 250

Interest expense 750

Interest payable 750

Prepaid advertising 2,000

Advertising expense 2,000

Superb store
Adjusted trial balance
December 31, 2022
Debit Crdit
Cash 277,830
Accounts receivable 275,000
Allowance for bad debts 27,500
Notes receivable 60,000
Office supplies 500
Interest receivable 250
Prepaid advertising 2,000
Merchandise inventory, Jan. 1, 2021 1,578,650
Delivery equipment 500,000
Accumulated depreciation - delivery equipment 100,000
Store equipment 150,000
Accumulated depreciation - store equipment 30,000
Office equipment 50,000
Accumulated depreciation - office equipment 15,000
Accounts payable 976,450
Notes payable 100,000
Sales salaries payable 5,000
Rent payable 10,000
Interest payable 750
C. Kat, Capital 1,503,945
D. Kat, Personal 60,000
Sales 3,760,600
Sales return and allowances 37,500
Sales discounts 50,650
Purchases 2,625,250
Purchase return and allowances 26,250
Purchase discounts 39,160
Transportation in 60,250
Sales salaries 220,675
Advertising expense 31,000
Commission expense 75,250
Delivery expense 112,500
Miscellaneous selling expense 12,450
Office salaries 125,900
Rent expense 120,000
Insurance expense 24,000
Office supplies expense 21,750
Taxes and licenses 10,250
Miscellaneous general expense 6,200
Depreciation expense - delivery equipment 50,000
Depreciation expense - store equipment 15,000
Depreciation expense - office equipment 5,000
Bad debts expense 25,500
Interest income 1,450
Interest expense 12,750
6,596,105 6,596,105

Superb store
Income statement
Year-ended December 31,2022
Sales 3
Less: Sales return and allowances 37,500
Sales discounts 50,650
Net sales 3
Less: Cost of sale
 Merchandise inventory, Jan. 1, 2022 1,578,650
Add: Net cost of purchases
Purchases 2,625,250
Less: Purchase return and allowances 26,250
Purchase discount 39,160 65,410
Net purchases 2,559,840
Add: Transportation in 60,250 2,620,090
Total goods available for sale 4,198,740
Less: Merchandise inventory, Dec. 31, 2022 1,850,620 2
Gross profit 1
Add: Interest income
Total 1
Less: Operating expenses
Selling expense:
Sales salaries expense 220,675
Advertising expense 31,000
Commission expense 75,250
Delivery expense 112,500
Depreciation expense - delivery equipment 50,000
Depreciation expense - store equipment 15,000
Miscellaneous selling expense 12,450 516,875

Administrative expenses:
Office salaries 125,900
Rent expense 120,000
Insurance expense 24,000
Office supplies expense 21,750
Taxes and licenses 10,250
Depreciation expense - office equipment 5,000
Bad debts expense 25,500
Miscellaneous general expense 6,200 338,600
Operating income
Less: Finance cost
Interest expense
Net income

Superb Store
Statement of changes in owner’s equity
Year-ended December 31, 2022
C. Kat, Capital, Jan. 1, 2022 1,503,945
Add: Net income 457,555
Total 1,961,500
Less: C. Kat, Personal 60,000
D. Kat, Capital, Dec. 31, 2022 1,901,500

Superb Store
 Statement of Financial Position
December 31, 2022

ASSETS
Current assets
Cash P 277,830
Accounts receivable 275,000
Less: Allowance for bad debts 27,500 247,500
Notes receivable 60,000
Office supplies 500
Interest receivable 250
Prepaid advertising 2,000
Merchandising inventory, Dec. 31, 2022 1,850,620
Total current assets 2,438,700

Non-current asset
Delivery equipment 500,000
Less: Accumulated depreciation 100,000 400,000
Store equipment 150,000
Accumulated depreciation 30,000 120,000
Office equipment 50,000
Accumulated depreciation 15,000 35,000
Total non-current assets 555,000
Total assets 2,993,700

LIABILITIES AND OWNERS EQUITY

Current liabilities
Accounts payable 976,450
Notes payable 100,000
Sales salaries payable 5,000
Rent payable 10,000
Interest payable 750
Total current liabilities 1,092,200

Owner’s equity
C. Kat, Capital, Dec. 31, 2022 1,901,500
Total liabilities and owner’s equity 2,993,700

Closing entries
Date Particulars Debit Credit
2022
Dec. 31 Merchandise inventory, Dec. 31, 2022 1,850,620
Sales 3,760,600
Purchase return and allowances 26,250
Purchase discounts 39,160
Interest income 1,450
Income summary 5,678,080
To recognize merchandise inventory ending, and
close the accounts with credit balances to income
summary
 Income summary 5,220,525
Merchandise inventory, Jan. 1, 2022 1,578,650
Purchases 2,625,250
Transportation in 60,250
Sales return and allowances 37,500
Sales discounts 50,650
Sales salaries expense 220,675
Advertising expense 31,000
Commission expense 75,250
Delivery expense 112,500
Depreciation expense - delivery equipment 50,000
Depreciation expense - store equipment 15,000
Miscellaneous selling expense 12,450
Office salaries 125,900
Rent expense 120,000
Insurance expense 24,000
Office supplies expense 21,750
Taxes and licenses 10,250
Depreciation expense - office equipment 5,000
Bad debts expense 25,500
Miscellaneous general expense 6,200
Interest expense 12,750
To close merchandising beginning and accounts
with debit balances to income summary

Income Summary 457,555

c Kat, Capital. Dec. 31, 2022 457,555

C Kat, Capital, Dec. 31, 2022 60,000

C Kat, Personal, 60,000

Superb Store
Post-closing trial balance
December 31, 2022

Debit Credit
Cash 277,830
Accounts receivable 275,000
Allowance for bad debts 27,500
Notes receivable 60,000
Office supplies 500
Interest receivable 250
Prepaid advertising 2,000
Merchandise inventory, Dec. 31, 2022 1,850,620
Delivery equipment 500,000
Accumulated depreciation 100,000
Store equipment 150,000
Accumulated depreciation 30,000
Office equipment 50,000
Accumulated depreciation 15,000
Accounts payable 976,450
Notes payable 100,000
Sales salaries payable 5,000
Rent payable 10,000
Interest payable 750
C Kat, Capital, Dec. 31, 2022 1,901,500
Total 3,166,200 3,166,200

Reversing entries
Date Particulars Debit Credit
2022
Dec. 31 Sales salaries payable 5,000
Rent payable 10,000
Sales salaries expense 5,000
Rent expense 10,000

Office supplies expense 500

Office supplies 500

Interest income 250

Interest receivable 250

Interest payable 750

Interest expense 750

Advertising expense 2,000

Prepaid advertising 2,000