Adjusting and Closing Entries

question 17

Essay

Adjusting and closing entries
The following trial balance was taken from the books of Kaslo Corporation at December 31, 2020:
At year end, the following items have not yet been recorded.
1. Insurance expired during the year, $ 3,000.
2. Estimated bad debts, 1 percent of gross sales.
3. Depreciation on furniture and equipment, 10% per year.
4. Interest at 9% is receivable on the note for one full year.
5. Rent paid in advance at December 31, $ 6,800 (originally debited to expense).
6. Accrued salaries at December 31, $ 6,200.
Instructions
a) Prepare the necessary adjusting entries.
b) Prepare the necessary closing entries.

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Definitions:

Open Market Operations

Monetary policy actions where central banks buy or sell government securities in the open market to control the money supply and interest rates.

Money Supply

The overall pool of economic resources in terms of money available at a particular time in an economy, including coins, paper money, and deposits in savings and checking accounts.

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.

Required Reserve Ratio

The fraction of deposits that banks are required by law to keep on hand or with the central bank as a reserve.