Question

These Income Statement columns from a 10-column work sheet are for Brown's Bike Rental Company Debit Credit 126,000 Account Title Rent earned Salaries expense Insurance expense Office supplies expense Bike repair expense Depreciation expense-Bikes 55,944 7.938 18,522 3,906 24,066 (1) Determine the amount that should be entered on the net income line of the work sheet. (2) Prepare the company's closing entries. The owner, H. Brown, did not make any withdrawals this period. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the amount that should be entered on the net income line of the work sheet. Required 2 >

Answer 1

Ans. 1	For the calculation of Net income, we need to prepare the Income Statement.
	Browns' Bike Rental Company
	Income Statement
	Particulars	Amount	Amount
	Revenues:
	Rent earned	$126,000
	Total revenue (a)		$126,000
	Less: Expesnes:
	Salaries expense	$55,944
	Insurance expense	$7,938
	Office supplies expense	$18,522
	Bike repair expense	$3,906
	Depreciation expense - Bikes	$24,066
	Total expenses (b)		$110,376
	Net Income (a - b)		$15,624
Ans. 2
Transaction	General Journal	Debit	Credit
1	Rent earned	$126,000
	Income summary		$126,000
	(To close revenue accounts)
2	Income summary	$110,376
	Salaries expense		$55,944
	Insurance expense		$7,938
	Office supplies expense		$18,522
	Bike repair expense		$3,906
	Depreciation expense - Bikes		$24,066
	(To close expenses accounts)
3	Income summary	$15,624
	H. Browns' capital		$15,626
	(To close income summary account)
	*Retained earnings account can also be credited rather than H. Browns' capital account.
	*Third entry is made by the amount of Net income.