Question

I need help with 20-26

The following are the year-end account balances for 20XC (prior to closing) of CAC Corporation: Cash Accounts Receivable Supplies Equipment Accumulated depreciation Accounts payable Notes payable Common stock Retained earnings Dividends Service revenue Salaries expense Supplies expense Rent expense Depreciation expense Miscellaneous expense $30,000 25,000 2,000 875,000 75,000 12,000 225,000 300,000 249,500 15,000 652,000 450,000 4,000 7,500 25,000 80,000 20. $ Determine total expenses for the year 21. $. Determine net income for the year 22. $ Determine ending retained earnings for the year 23.$. Determine ending total stockholders' equity for the year 24. $ Determine total Current Assets at the end of the year 25. $ _Determine Total Assets at the end of the year 26. Should Depreciation expense be closed at year end?

Answer 1

Solution

CAC Corporation

1. Total expenses for the year –

Total expenses = $566,500

Total Expenses:
Salaries expense	$450,000
Supplies Expense	4,000
Rent Expense	$7,500
Depreciation Expense	$25,000
Miscellaneous Expense	$80,000
Total Expenses	$566,500

2. Net income for the year –

Net income = service revenue – total expenses

Service Revenue		$652,000
Total Expenses:
Salaries expense	$450,000
Supplies Expense	4,000
Rent Expense	$7,500
Depreciation Expense	$25,000
Miscellaneous Expense	$80,000
Total Expenses	$566,500
net income		$85,500

3. Ending retained earnings balance –

Ending retained earnings = beginning retained earnings + net income – dividends

Beg. Retained earnings	$249,500
Add: net income	$85,500
total	$335,000
Less: dividends	$15,000
Ending Retained Earnings	$320,000

4. Total current assets –

Current Assets
Cash	$30,000
Accounts Receivable	$25,000
Supplies	$2,000
total Current Assets	$57,000

5. Ending stockholders’ equity –

Ending stockholders’ equity = beg. Stockholders’ equity + retained earnings

Common stock      $300,000

Ending retained earnings $320,000

Ending Stockholders’ Equity = $620,000

6. Total assets at the end of the year –

Total assets = current assets + property, plant & equipment

Total Assets
Current Assets
Cash	$30,000
Accounts Receivable	$25,000
Supplies	$2,000
total Current Assets		$57,000
Equipment	$875,000
Less: accumulated depreciation -equipment	$75,000	$800,000
Total Assets		$857,000

7. Depreciation expense at year end –

Yes, depreciation expense is closed at year end.

When a depreciation expense entry is made, the credit to accumulated depreciation records the year’s depreciation expense, while the debit to depreciation expense is closed using closing entry.

All the expenses accounts, including depreciation expense are closed using closing entries.

A closing entry is made by using Income Summary Account to close all revenue and expenses account. The ending balance in the Income Summary account is closed to retained earnings.