Question

Seminoles Corporation's fiscal year-end is December 31, 2021. The following is a partial adjusted trial balance as of December 31. Debit Credit $20,000 $ 2,000 Accounts Retained Earnings Dividends Service Revenue Interest Revenue Salaries Expense Rent Expense Advertising Expense Depreciation Expense Interest Expense 40,000 5,000 14,000 5,000 2,000 10,000 4,000 Required: 1. Prepare the necessary closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Solution:

1) Closing Entries:

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Service Revenue	$          40,000
	Interest Revenue	$            5,000
	Income Summary		$           45,000
	(To close Income account )
Dec. 31	Income Summary	$          35,000
	Salaries Expense		$           14,000
	Rent Expense		$              5,000
	Advertisement Expense		$              2,000
	Depreciation Expense		$           10,000
	Interest Expense		$              4,000
	(To close Expense account )
Dec. 31	Income Summary ( $45,000 - $35,000)	$          10,000
	Retained Earnings		$           10,000
	(To close income summary )
Dec. 31	Retained Earnings	$            2,000
	Dividends		$              2,000
	(To close dividend account to retained earnings)

2) Ending Balance of Retained Earnings = $28,000

Retained Earnings
Dividends	$         2,000	Beg Balance	$                20,000
		Income Summary	$                10,000
		End Balance	$                28,000

Notes:

1) Retained Earnings balance given in the question is taken as Beginning Balance.