The Trial Balance Of Bellemy Fashion Center Contained The Fo

The Trial Balance Of Bellemy Fashion Center Contained The Following Ac

The trial balance of Bellemy Fashion Center contained the following accounts at November 30, the end of the company’s fiscal year.

Trial Balance as of November 30, 2012:

| Account Description | Debit | Credit |

|-----------------------|--------|---------|

| Cash | $33,580 | |

| Accounts Receivable | $37,370 | |

| Inventory | $48,670 | |

| Supplies | $9,170 | |

| Equipment | $140,340 | |

| Accumulated Depreciation—Equipment | | $26,420 |

| Notes Payable | | $54,670 |

| Accounts Payable | | $52,170 |

| Common Stock | | $93,670 |

| Retained Earnings | | $11,670 |

| Sales Revenue | | $765,750 |

| Sales Returns and Allowances | $4,200 | |

| Cost of Goods Sold | $495,400 | |

| Salaries and Wages Expense | $138,360 | |

| Advertising Expense | $27,610 | |

| Utilities Expenses | $15,640 | |

| Maintenance and Repairs Expense | $12,100 | |

| Freight-out | $16,700 | |

| Rent Expense | $25,210 | |

| Total | $1,004,350 | $1,004,350 |

Adjustment data:

1. Supplies on hand totaled $5,170.

2. Depreciation on equipment is $16,815.

3. Interest accrued on notes payable at November 30 is $15,110.

Other data:

- Salaries expense is 70% selling and 30% administrative.

- Rent and utilities expenses are 80% selling and 20% administrative.

- $30,000 of notes payable are due next year.

- Maintenance and repairs expense is 100% administrative.

Instruction:

Journalize the adjusting entries for the above data, with credit account titles indented automatically when amounts are entered. Do not indent manually.

Paper For Above instruction

The preparation of adjusting entries is a critical aspect of ensuring that the financial statements accurately reflect the company's financial position as of the reporting date. Based on the given trial balance and adjustments, this paper will detail the necessary journal entries, elaborating on the rationale behind each adjustment.

Adjustment 1: Supplies on hand

The trial balance shows supplies totaling $9,170. However, at the end of the period, supplies on hand are valued at $5,170. The difference between these amounts represents supplies used during the period, which must be expensed. The adjusting entry reduces supplies asset account and recognizes supplies expense:

Supplies Expense 	$4,000


Supplies 		    $4,000

This adjustment ensures that supplies expense reflects the actual supplies used during the period, aligning expenses with revenues generated.

Adjustment 2: Depreciation on equipment

The equipment has accumulated depreciation of $26,420. The annual depreciation expense on equipment is provided as $16,815. To record depreciation expense, the journal entry increases accumulated depreciation and recognizes depreciation expense:

Depreciation Expense 	$16,815


Accumulated Depreciation—Equipment 	$16,815

This entry depreciates the equipment for the period, matching expenses with the period's usage and ensuring assets are not over-stated.

Adjustment 3: Accrued interest on notes payable

The accrued interest of $15,110 needs to be recorded to account for interest expense incurred but not yet paid. The adjusting journal entry is:

Interest Expense 		$15,110


Interest Payable 		$15,110

This accrual reflects the liability for interest expense incurred during the period, complying with the matching principle and accurately presenting liabilities.

Additional considerations:

The adjustment of supplies, depreciation, and interest ensures that expenses are recorded in the period they relate to, conforming to accrual accounting principles. These adjustments also impact net income and retained earnings, which are vital for stakeholder decision-making. Proper documentation and justification of each entry are necessary for audit purposes and financial reporting integrity.

References

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