Question

% S4-11 (similar to) A Question Hel The following balances appear on the books of Sarah Simon Enterprises: Retained Earnings, $28,700; Dividends, $7,500; Income Summary, $O; Service Revenue, $22,200, Salaries Expense, $7,500; Rent Expense $3,500; and Advertising Expense, $2,100. All aco have normal balances. Read the requirements. Requirement 2. Post the closing entries to the accounts, denoting posted amounts as Clos. Start by closing revenues. Retained Earnings 28,700 Adj. Bal. Service Revenue 22,200 Adj. Bal. 0 Requirements Dividends 7,500 Salaries Expense 7,500 Adj. Bal. Adj. Bal. 1. The T-accounts have been set up for you. Insert each account's adjusted balance as given (denote as Adj. Bal.) at December 31. 2. Post the closing entries to the accounts, denoting posted amounts as Clos. 3. Compute the ending balance of Retained Earnings. Income Summary Rent Expense 3,500 Adj. Bal. Print Done Advertising Expense 2,100 Adj. Bal. Choose from any list or enter any number in the input fields and then click Check Answer. A parts 4 remaining Clear All Check Answer

Answer 1

Closing entry for transferring revenue to income summary

	Dr.	Cr.
Service revenue	22,200
Income summary	22,200

(service revenue has a credit balance so to close the account we will debit it and transfer it to income summary )

Closing entry for transferring all expenses income summary

	Dr.	Cr.
Income summary	13,100
Salaries expense		7,500
Rent expense		3,500
Advertising expense		2,100

(expenses have debit balance so to close the accounts we will credit all expense accounts and transfer to income summary)

Balance of Net income and loss that will be transferred to Retained earnings

	$
Revenue	22,200
less: Salary expense	-7,500
Rent expense	-3,500
Advertising expense	-2,100
Net Income	9,100

Closing entry to transfer Net income to retained earnings

	Dr.	Cr.
Income summary	9100
Retained earnings		9100

(Net profit has a credit balance so to close the account we will debit it and credit retained earnings)

Dividends expense are closed out of retained earnings and reduce retained earnings balance so closing entry for dividends

	Dr.	Cr.
Retained earnings	7,500
Dividends		7,500

(dividend expense account credited to close the account )

T- accounts prepared based on above entries:

Retained Earnings 28,700.00 Adj. Bal. 9,100.00 Clos. 7,500.00 Clos. 30,300.00

Service Revenue 22,200.00 Adj. Bal. 22,200.00 Clos.

Adj. Bal. C Salaries Expense 7,500.00 7,500.00 Clos.

Rent Expense Adj. Bal. L 3,500.00 3,500.00 Clos.

Adj. Bal. O Advertising expense 2,100.00 2,100.00 Clos.

Clos. Income Summary 22,200.00 Clos. 3,500.00 2,100.00 7,500.00 9,100.00 Clos. Clos. Clos.

Dividends 7,500.00 Adj. Bal. 7,500.00 Clos.

Closing retained earnings balance as per T account prepared above

Adjusted balance $28,700

Add:Net Income 9,100

Less: Dividends -7,500

ending balance $30,300