Question

Presented below are selected account balances for Wildhorse Co. as of December 31, 2020. Inventory 12/31/20 $58,920 Cost of Goods Sold $224,039 Common Stock 74,150 Selling Expenses 16,031 Retained Earnings 45,400 Administrative Expenses 37,726 Dividends 17,830 Income Tax Expense 29,720 Sales Returns and Allowances 12,068 Sales Discounts 15,010 Sales Revenue 417,740 Prepare closing entries for Wildhorse Co. on December 31, 2020.

Answer 1

Closing Entries:

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020	Sales Revenue	$417,740
	Income Summary		$417,740
	(To close revenue accounts)
Dec. 31, 2020	Income Summary	$334,594
	Cost of Goods Sold		$224,039
	Selling Expenses		$16,031
	Administrative Expenses		$37,726
	Income Tax Expense		$29,720
	Sales Returns and Allowances		$12,068
	Sales Discounts		$15,010
	(To close expense accounts)
Dec. 31, 2020	Income Summary ($417,740 - $334,594)	$83,146
	Retained Earnings		$83,146
	(To close net income)
Dec. 31, 2020	Retained Earnings	$17,830
	Dividends		$17,830
	(To close dividends to retained earnings)