ADJUSTING ENTRIES

AND REVERSING ENTRIES

ARDEN TRADING
DECEMBER 31, 2015
 1. Unsold merchandise determined by physical count on
December 31, 2015 amount to 209, 360.
Adjusting Entry:
Merchandise Inventory, end 209,360
Income Summary 209,360
 2. Store supplies unused at December 31, 2015 is
1,240.

Initial Journal Entry:

Office Supplies 3,040
Cash 3,040

Adjusting Entry:
Supplies Expense 1,800
Office Supplies 1,800
Office Supplies

3,040
1,800

1,240
3. On April 1, 2015 Arden paid in advance a one-year
coverage on its business assets.

Initial Journal Entry:

Prepaid Insurance 6,080
Cash 6,080

Adjusting Entry:
Insurance Expense 4,560
Prepaid Insurance 4,560
Prepaid Insurance

6,080
4,560

1,520
 4. Salaries accrued at December 31, 2015 amounted to
6,000.

Adjusting Entry:
Salaries Expense 6,000
Salaries Payable 6,000
Reversing Entry:
Salaries Payable 6,000
Salaries Expense 6,000
5. The Notes Receivable is a one-year 6% note dated
August 1, 2015.

Initial Journal Entry:

Notes Receivable 15,000
Cash 15,000

Adjusting Entry:
Interest Receivable 375
Interest Income 375

Reversing Entry:
Interest Income 375
Interest Receivable 375
6. Building is depreciated at 5% per annum.
Adjusting Entry:
Depreciation Expense-Building 10,800
Accumulated Depreciation-Building 10,800
7. Store Equipment which has a scrap value of 800 has a
useful life of 10 years.

Adjusting Entry:
Depreciation Expense-Store Equipment 7,200
Accumulated Depreciation-Store Equipment 7,200
8. The notes payable is a 60-day 12% note dated November
16, 2015.

Initial Journal Entry:

Cash 10,000
Notes Payable 10,000
Adjusting Entry:
Interest Expense 150
Interest Payable 150
Reversing Entry:
Interest Payable 150
Interest Expense 150
 Members:
Ritcher Keint Pablico
Lucy Allauigan
Krishan Doniego
MJ Talamayan
Jemimah Danguilan