Midtown Fashion Village has the following items in its trial balance at the 30th June 2011. Debit

Midtown Fashion Village has the following items in its trial balance at the 30th June 2011.

Debit Credit

Cash 36,700

Accounts Receivable 33,700

Trade Inventory 45,000

Store Supplies 5,500

Store Equipment 85,000

Accumulated Depreciation Store Equipment 38,000

Office Equipment 38,000

Accumulated Depreciation Office Equipment 6,000

Notes Payable 41,000

Accounts Payable 43,500

Capital 80,000

Retained Earnings 30,000

Dividends Paid 12,000

Sales 747,200

Sales returns and allowances 4,200

Purchases 502,400

Salaries Expense:

Administrative Staff 100,000

Sales Staff 30,000

Advertising Expense 26,400

Electricity Expense 14,000

Repairs Expense 12,100

Freight out 16,700

Rent (office space) 24,000 .

$985,700 $985,700

The following information is also provided and it has not been included in the above trial

balance:

1. Store supplies on hand as at 30th June 2011 totals $3,500.

2. Depreciation for the financial year ended 30th June 2011 is $9,000 for store

equipment and $7,000 for office equipment.

3. Interest of $11,000 is accrued on notes payable as at 30th June 2011.

4. Notes payable of $30,000 are due for payment in the financial year ended 30th

June 2012.

5. Inventory on hand as at 1 July 2010 was valued at $50,000.

6. Income tax can be ignored.

Required:

a) Journalise the year-end adjusting entries as per 1 – 3 above.

b) For the end of the financial accounting period 30th June 2011 prepare an Income

Statement reporting both Gross Profit and Net Profit.

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