Question

he adjusted trial balance for China Tea Company at December 31, 2018, is presented below:

	Debit			Credit
Cash		11,300
Accounts receivable		158,000
Prepaid rent		5,800
Inventory		33,000
Equipment		380,000
Accumulated depreciation - equipment					133,000
Accounts payable					38,000
Notes payable - due in three months					38,000
Salaries payable					4,800
Interest payable					1,800
Common stock					240,000
Retained earnings					67,600
Sales revenue					480,000
Costs of goods sold		220,000
Salaries expense		128,000
Rent expense		23,000
Depreciation expense		38,000
Interest expense		2,800
Advertising expense		3,300
Totals		1,003,200			1,003,200

Required:
Prepare the closing entries for China Tea Company for the year ended December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Closing entries

date	Account and explanation	Debit	Credit
Dec 31	Sales revenue	480000
	Income summary		480000
	(To close revenue)
Dec 31	Income summary	415100
	Cost of goods sold		220000
	Salary expense		128000
	Rent expense		23000
	Depreciation expense		38000
	Interest expense		2800
	Advertising expense		3300
	(To close expense)
Dec 31	Income summary	64900
	Retained earnings		64900
	(To close income summary)