Question

3. Below is the Adjusted Trial Balance for Bono Furnishing Co. for the fiscal year ending August 31, 2019. Bono Furnishing Co. Adjusted Trial Balance For the 12 Months Ended August 31, 2019 Credit Debit 80,300 4,500 6,500 900 40,000 General Ledger Account 101-Cash 102-Accounts Receivable 103-Supplies 104-Prepaid Insurance 150-Computer (cost) 151-Accumulated Depreciation 200-Accounts Payable 201-Unearned Revenue 300-Owner's Capital 301-Owner's Drawings 400-Service Revenue 401-Product Revenue 510-Utilities Expense 530-Salaries & Wages Expense 600-Telephone Expense 610-Supplies Expense 1,700 3,000 65,000 75,000 3,000 12,500 27,500 5,000 24,000 12,000 8,500 184,700 $ $ 184,700 A. Journalize the closing entries Description Dr

Answer 1

Closing entries are the entries passed for closing the temporary accounts (Revenue and Expenses Accounts) at the end of the accounting period. They are done after the financial statement for the accounting year has been prepared. This is done to make the temporary accounts zero so that these temporary accounts begins with zero balance in the next accounting period. Closing credit/debit entry is passed in all temporary accounts having debit balance/credit balance before passing the closing entry. The credit /debit amount entered is equal to the debit/credit balance prior to passing the closing entry. The net amount of closing entries is the Net Income /(Loss) for the period which is ultimately transferred to retained earnings/ Owners' Capital account.

Date	Account Title	Debit	Credit
Aug 31, 2019	Service Revenue	$12,500
	Product Revenue	$27,500
	Income Summary		$40,000
	(To record close the revenue account)
Aug 31, 2019	Income Summary	$49,500
	Utilities Expense		$5,000
	Salaries and Wages Expense		$24,000
	Telephone Expense		$12,000
	Supplies Expense		$8,500
	(To record close the expense account)
Aug 31, 2019	Owners' Capital	$9,500
	Income Summary		$9,500
	(To close the income summary account)
Aug 31, 2019	Owners' Drawings	$3,000
	Income Summary		$3,000
	(To close the drawings account)