Question

Rainbow Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at August 31, the end of the fiscal year, the following balances were taken from the ledger of Rainbow Services:

Journalize the four entries required to close the accounts. Refer to the Chart of Accounts for exact wording of account titles.

Instructions Chart of Accounts General Ledger Rainbow Services Co. offers its services to individuals desiring to improve their personal images. After the accounts have been adjusted at August 31, the end of the fiscal year, the following balances were taken from the ledger of Rainbow Services ASSETS REVENUE 11 Cash 12 Accounts Receivable 13 Prepaid Rent 14 Supplies 41 Fees Earned Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Supplies Expense Miscellaneous Expense $2,650,000 10,000 1,050,000 886,000 185,000 26,200 28,600 EXPENSES 51 Wages Expense 52 Rent Expense 53 Supplies Expense 54 Miscellaneous Expense LIABILITIES 21 Accounts Payable 22 Wages Payable 23 Unearned Fees EQUITY Journalize the four entries required to close the accounts. Refer to the Chart of Accounts 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary for exact wording of account titles

Answer 1

	Closing Entries
	Account titles & Explanations				Debit	Credit
1)	Fees earned				1,050,000
	Income summary					1,050,000
2)	Income summary				1,125,800
	Wages expense					886,000
	Rent expense					185,000
	Supplies expense					26,200
	Miscellaneous expense					28,600
3)	Retained earnings				75,800
	income summary					75,800
4)	Retained earnings				10,000
	Dividends					10,000