Reference no: EM132582512

Use the unadjusted trial balance of Electric Bike on December 31, 2020.

Cash$8,400

Accounts receivable 22,965

Merchandise inventory 34,900

Store supplies 2,565

Office supplies 805

Prepaid insurance 3,555

Equipment 77,790

Accumulated depreciation, equipment $13,955

Accounts payable 8,300

Salaries payable 0

Braeden Li, capital 174,215

Braeden Li, withdrawals 63,500

Interest income 340

Sales 530,500

Sales returns and allowances 5,370

Cost of goods sold 381,460

Salaries expense 96,600

Rent expense 29,400

Supplies expense 0

Depreciation expense, equipment 0

Insurance expense 0

Totals$727,310

Required:

Question 1. Record adjusting entries for the following information.

a. The records show that the equipment was estimated to have a total estimated useful life of 10 years with a residual value at the end of its life of $14,790.

b. The balance in the Prepaid Insurance account was reviewed and it was determined that $270 was unused at December 31, 2020.

c. A review of the store supplies on December 31, 2020, revealed a balance on hand of $2,090; a similar examination of the office supplies showed that $655 had been used.

d. Accrued salaries payable, $1,950.

e. A count of the merchandise inventory revealed a balance on hand December 31, 2020, of $34,070.

Question 2. Prepare a multiple-step income statement showing the expenses in detail.