Question

Presented below are selected account balances for Blue Co. as of December 31, 2020.

Inventory 12/31/20		$60,260		Cost of Goods Sold		$223,793
Common Stock		73,760		Selling Expenses		15,746
Retained Earnings		45,260		Administrative Expenses		38,647
Dividends		17,810		Income Tax Expense		29,630
Sales Returns and Allowances		12,207
Sales Discounts		15,210
Sales Revenue		416,460

Prepare closing entries for Blue Co. on December 31, 2020

Answer 1

Closing Entries

Date	Accounts	Debit	Credit
2020
Dec 31	Sales Revenue	416,460
	Income Summary		416,460
	(Close income side of income statements)
Dec 31	Income summary	335,233
	Sales Return and allowance		12,207
	Sales discount		15,210
	Cost of goods sold		223,793
	Selling expenses		15,746
	Administrative expenses		38,647
	Income tax expense		29,630
	(Close expenses side of income statement)
Dec 31	Income summary	81,227
	Retained earnings		81,227
	(Profit transferred to retained earnings)
Dec 31	Retained earnings	17,810
	Dividends		17,810
	( Close dividend account)