Question

he unadjusted trial balance of Martinez Enterprises for the year ending December 31, 2021, follows:

MARTINEZ ENTERPRISES Trial Balance December 31, 2021
		Debit		Credit
Cash		$15,000
Accounts receivable		19,200
Merchandise inventory		37,050
Prepaid insurance		3,000
Supplies		2,950
Equipment		150,000
Accumulated depreciation—equipment				$35,000
Furniture		45,000
Accumulated depreciation—furniture				18,000
Accounts payable				33,200
Unearned revenue				4,000
Mortgage payable				125,000
S. Kim, capital				46,200
S. Kim, drawings		48,000
Sales				265,000
Sales returns and allowances		2,500
Sales discounts		3,275
Cost of goods sold		153,000
Interest expense		6,875
Salaries expense		35,450
Utilities expense		5,100
		$526,400		$526,400

Prepare the adjusting journal entries assuming they are prepared annually

Additional information:

1.		There is $790 of supplies on hand on December 31, 2021.
2.		The one-year insurance policy was purchased on March 1, 2021.
3.		Depreciation expense for the year is $10,000 for the equipment and $4,500 for the furniture.
4.		Accrued interest expense at December 31, 2021, is $700.
5.		Unearned revenue of $725 is still unearned at December 31, 2021. On the sales that were earned, cost of goods sold was $1,850.
6.		A physical count of merchandise inventory indicates $32,250 on hand on December 31, 2021.
7.		Global uses the perpetual inventory system and the earnings approach.

Answer 1

Solution :

Below is the adjusting entries required at the year end

Note :

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