Question

As of December 31, Sue Flay's Cakery shows the following account balances (after adjustments):

Cash: $15,600
Accounts Receivable: $4,900
Inventory: $6,500
Prepaid Rent: $2,700
Equipment (net of Accumulated Depreciation):$94,000
Accounts Payable: $3,600
Unearned Sales Revenue: $3,200
Notes Payable: $19,500
Common Stock: $12,000
Retained Earnings: $55,700
Dividends: $6,500
Sales Revenue: $60,400
Consulting Income: $15,700

Supplies Expense: $8,200
Depreciation Expense: $7,100
Salaries Expense: $18,000
Insurance Expense: $1,500
Telephone Expense: $1,700
Utilities Expense: $3,400

1.   Prepare the closing entries for Sue Flay's Cakery as of December 31. The only thing you may omit are journal entry explanations. You may assume all accounts have a normal debit or credit balance.
(HINT: there are four entries you must make.) (Each correct closing entry is worth 1.5 points.)
2.   What is Sue Flay's total liabilities as of December 31?(0.5 points)
3.   What is the balance in Retained Earnings as of December 31? (1.5 points)

SPECIFIC INSTRUCTION: For each journal entry, type your response in the following format:

DR (account name) $(amount) CR (account name) $(amount)

For example, if you are making an entry to debit Cash for$100 and credit Accounts Payable for $100, you would enter the following:

DR Cash $100
CR Accounts Payable $100

Answer 1

1.

	Account Titles	Debit	Credit
DR	Sales Revenue	$          60,400
DR	Consulting Income	$          15,700
CR	Income Summary		$            76,100
	(To close revenue accounts)
DR	Income Summary	$          39,900
CR	Supplies expense		$              8,200
CR	Depreciation Expense		$              7,100
CR	Salaries Expense		$            18,000
CR	Insurance Expense		$              1,500
CR	Telephone Expense		$              1,700
CR	Utilities expense		$              3,400
	(To close expense accounts)
DR	Income Summary	$          36,200
CR	Retained Earnings		$            36,200
	(To transfer net income)
DR	Retained Earnings	$             6,500
CR	Dividend		$              6,500
	(To close Dividend account)

2.

Liabilities
Accounts Payable	$             3,600
Unearned Sales Revenue	$             3,200
Notes Payable	$          19,500
Total Liabilities	$          26,300

3.

Statement of Retained Earnings
Beginning Balance	$          55,700
Add : Net income	$          36,200
Less Dividend	$             6,500
Ending Balance	$          85,400