accounting- adjusting and closing entries

Big Ed’s Motorcycle Shop is nearing the fiscal year-end. You have been asked to prepare the adjusting and closing entries to prepare the books for the 2008 year-end.

Download Big Ed’s trial balance to begin preparing your adjusting and closing entries:

• Big Ed’s Motorcycle Shop Trial Balance

Following is the information you will need to make your adjusting entries:

1. Office equipment has a life of five years with no residual value.
2. Store equipment has a life of five years with no residual value.
3. Shop equipment has a life of ten years with no residual value (assume new equipment was purchased Jan. 1.)
4. A physical inventory of Merchandise Inventory, Parts revealed an actual balance of $97,000.
5. A physical inventory of Merchandise Inventory, Motorcycles revealed that the balance was accurate.
6. Office supplies in the amount of $1,500 were used throughout the year.
7. Salaries should be accrued as follows:
   1. Sales – $3,000
   2. Service – $5,000
   3. Office – $1,500
8. Insurance in the amount of $1,200 was used throughout the year.
9. Interest on the Note Payable is 8% (assume new note was taken out on Jan. 1.)
10. Use straight line depreciation.  Calculate the depreciation using the asset balance and ignore the balance in Accumulated Depreciation.  Assume that no expense has been recorded for the year.