Question

 SMART TOUCH LEARNING

 Adjusted Trial Balance

 December 31, 2016

Answer 1

Answer

• Requirement asked

Date	Accounts & Explanation	Debit	Credit
31-Dec-16	Service Revenue	$52,400
	Income Summary		$52,400
	(to close reveues)
31-Dec-16	Income Summary	$10,900
	Depreciation expense - furniture		$2,300
	Interest expense		$300
	Rent Expense		$3,400
	Salaries Expense		$4,000
	Supplies expense		$900
	(to close expenses)
31-Dec-16	Income Summary	$41,500
	bright, Capital		$41,500
	(to close net income - Income Summary balance)
31-Dec-16	Bright, Withdrawals	$29,400
	Bright, Capital		$29,400
	(to close withdrawals)

General Concepts regarding Closing entries:

#1:Temporary accounts, like Revenue accounts, have normal CREDIT balances, and hence they are closed by DEBITING the account.

#2:Temporary accounts, like Expense accounts or Contra revenue accounts, have normal DEBIT balances, and hence they are closed by CREDITING the account.

#3: In case of Net Income, Income Summary account has a CREDIT balance, and in order to close the Income Summary account, we DEBIT the account, and Credit Retained earnings/Owner's Capital

#4: In case of Net Loss, Income Summary account has a DEBIT balance, and in order to close the Income Summary account, we CREDIT the account, and Debit Retained earnings/Owner's Capital

#5: Dividend accounts have normal DEBIT balance, and are closed by CREDITING them, and debiting Retained earnings account.

#6: Drawings or Withdrawal account have a normal DEBIT balance, and hence closed by CREDITING the account, and debiting Owner's Capital account.