Question

Consumer Research Associates, owned by Gloria Johnson, is retained by large companies to test consumer reaction to new products. On January 31, 2019, the firm’s worksheet showed the following adjustments data: (a) supplies used, $2,160; (b) expired rent, $11,200; and (c) depreciation on office equipment, $4,400. The balances of the revenue and expense accounts listed in the Income Statement section of the worksheet and the drawing account listed in the Balance Sheet section of the worksheet are given below:

REVENUE AND EXPENSE ACCOUNTS
401	Fees Income	$	108,000	Cr.
511	Depr. Expense—Office Equipment		4,400	Dr.
514	Rent Expense		11,200	Dr.
517	Salaries Expense		47,700	Dr.
520	Supplies Expense		2,160	Dr.
523	Telephone Expense		1,170	Dr.
526	Travel Expense		10,210	Dr.
529	Utilities Expense		1,070	Dr.

DRAWING ACCOUNT
302	Gloria Johnson, Drawing	9,200	Dr.

Required:

1. Record the adjusting entries in the general journal (transactions 1-3).
2. Record the closing entries in the general journal (transactions 4-7).

Answer 1

Adjusting Entries:

	Account title and Explanation	Debit	Credit
(a)	Supplies expense	$2,160
	Supplies		$2,160
	[To record supplies expense]
(b)	Rent expense	$11,200
	Prepaid rent		$11,200
	[To record rent expense]
(c)	Depreciation expense-office equipment	$4,400
	Accumulated depreciation-Office equipment		$4,400
	[To record depreciation expense]

Closing Entries:

Account title and Explanation	Debit	Credit
Fees Income	$108,000
Income Summary		$108,000
[To close revenue accounts]
Income Summary	$77,910
Depr. Expense—Office Equipment		$4,400
Rent Expense		$11,200
Salaries Expense		$47,700
Supplies Expense		$2,160
Telephone Expense		$1,170
Travel Expense		$10,210
Utilities Expense		$1,070
[To close expenses accounts]
Income Summary [108,000-77,910]	$30,090
Gloria Johnson, Capital		$30,090
[To close income summary account]
Gloria Johnson, Capital	$9,200
Gloria Johnson, Drawing		$9,200
[To close drawings account]