Question

Prepare closing entries to Retalhed Earnings The Century Company's adjusted trial balance contains the following balances as of December 31: Retained Earnings $17,000; Dividends $4,000; Sales $40,000; Cost of Goods Sold $16,000; Selling and Administrative Expenses $6,000; Interest Expense $3,000. Prepare the closing entries for The Century Company. Close the temporary accounts straight to retained earnings. General Journal Description Debit To close the revenue account. Cost of goods sold Selling and administrative expense To close the expense accounts. To close the dividends account. The balance of $17,000 in the retained earnings account is from the beginning of the year. What is the ending retained earnings balance after posting the closing entries?

Answer 1

Journal Entries Date Account Title and Explaination Debit Credit Post. Ref. a 40,000.00 Sales Income Summary (To Close the revenue account) 40,000.00 b 25,000.00 SA Income Summary Cost of Goods Sold Selling and Administrative Expenses Interest Expense (To Close the Expense accounts) SA 16,000.00 6,000.00 3,000.00 SA c 15,000.00 Income Summary Retained Earnings To Close Income Summary to retained earnings) $ 15,000.00 4,000.00 Retained Earnings Dividends (To Close Dividends Account) S 4,000.00

Calculation of Ending Balance of Retained Earnings after posting the closing entries: $ Beginning Balance of Retained Earnings Add: Net Income Sub total Less: Dividends Ending Balance of Retained Earnings 17,000.00 15,000.00 32,000.00 (4,000.00) $ 28,000.00