XYZ Company’s December 31, 2014 trial balance is as follows

XYZ Company’s December 31, 2014 trial balance is as follows:

XYZ Corporation
Trial Balance
December 31, 2014
Account Debit Credit
Cash $43,500
Accounts Receivable 53,500
Allowance for Doubtful Accounts 1,500
Notes Receivable 30,000
Merchandise Inventory 55,000
Land 20,000
Building 150,000
Accumulated Depreciation, Building $15,000
Equipment 50,000
Accumulated Depreciation, Equipment 21,000
Goodwill 26,000
Accounts Payable 25,000
Long Term Notes Payable 75,000
Common Stock, $10 par, 2,000 shares authorized & outstanding 20,000
Retained Earnings 147,000
Sales Revenue 700,000
Salaries Expense 150,000
Utilities Expense 3,500
Cost of Goods Sold 350,000
Administrative Expenses 55,000
Sales Expenses 15,000 _______
Totals $1,003,000 $1,003,000

XYZ is a small company and records adjusting entries & closing entries only at fiscal (calendar) year end. Correcting and adjusting entries have not been recorded.

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Additional Information:

a. Notes Receivable is a 3-months, 6% note accepted on November 1, 2014.

b. Long Term Notes Payable is a 5-year, 5% note, that was signed on July 1, 2014. Interest is payable annually.

c. Building is depreciated at 3% per year. There is no salvage value.

d. Equipment is depreciated at 15% year. There is no salvage value.

e. XYZ discovered, on December 30th, that the inexperienced bookkeeper recorded in the general journal and general ledger that day’s $1,500 cash sales as a debit to Accounts Receivable and a credit to Sales Revenue.

f. The year-end physical count for Merchandise Inventory reflected a value of $51,500. Any difference in value will not be considered theft or loss.

g. Salaries for the last half of December, payable in January, amount to $5,500.

h. XYZ estimates that of the Accounts Receivable 5% will not be collectable.


a. Prepare in journal form, any required correcting entries

b. Prepare in journal form, all end-of-the period adjusting entries

c. Prepare a December adjusted trial balance

d. Prepare a classified balance sheet for the year ended December 31, 2014

e. Prepare in journal form, the closing entries for the year ended December 31, 2014

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