Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report.
GERDES PSYCHOLOGICAL SERVICES, INC. | |||||||
Income Statement | |||||||
For the year ended December 31, current year | |||||||
Revenue: | |||||||
Counseling revenue | $ | 420,000 | |||||
Expenses: | |||||||
Advertising expense | $ | 2,000 | |||||
Salaries expense | 95,000 | ||||||
Office supplies expense | 1,900 | ||||||
Utilities expense | 850 | ||||||
Malpractice insurance expense | 7,000 | ||||||
Office rent expense | 25,000 | ||||||
Continuing education expense | 2,400 | ||||||
Depreciation expense: fixtures | 5,000 | ||||||
Miscellaneous expense | 8,000 | ||||||
Income taxes expense | 33,000 | 180,150 | |||||
Net income | $ | 239,850 | |||||
The firm's statement of retained earnings indicates that a $6,000 cash dividend was declared and paid during the current year.
a. Prepare the necessary closing entries on December 31, current year.
b. If the firm's Retained earnings account had a $94,000 balance on January 1, current year, at what amount should Retained earnings be reported in the firm's balance sheet dated December 31, current year?
Prepare the necessary closing entries on December 31, current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
If the firm's Retained earnings account had a $94,000 balance on January 1, current year, at what amount should Retained earnings be reported in the firm's balance sheet dated December 31, current year?
Requirement a:
Closing entries:
Date | Account title and Explanation | Debit | Credit |
Dec.31 | Counseling revenue | 420,000 | |
Income summary | 420,000 | ||
[To close revenue accounts] | |||
Dec.31 | Income summary | 180,150 | |
Advertising expense | 2,000 | ||
Salaries expense | 95,000 | ||
Office supplies expense | 1,900 | ||
Utilities expense | 850 | ||
Malpractice insurance expense | 7,000 | ||
Office rent expense | 25,000 | ||
Continuing education expense | 2,400 | ||
Depreciation expense: fixtures | 5,000 | ||
Miscellaneous expense | 8,000 | ||
Income taxes expense | 33,000 | ||
[To close expenses accounts] | |||
Dec.31 | Income summary | $239,850 | |
Retained earnings | $239,850 | ||
[To close income summary account] | |||
Dec.31 | Retained earnings | $6,000 | |
Cash Dividends | $6,000 | ||
[To close cash dividends account] |
Requirement b:
Statement of Retained Earnings | |
Retained Earnins, Jan 1 | $94,000 |
Add: Net income | $239,850 |
(Less): Dividends | ($6,000) |
Retained Earnins, Dec.31 | $327,850 |
Gerdes Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company...
Saved Chapter 5 Homework Check my work mode: This shows what is correct or incorrect for the work you have completed so far, it Gerdes Psychological Services, Inc, closes its temporary accounts once each year on December 31. The compa following income statement as part of its annual report. 2,500 GERDES PSYCHOLOGICAL SERVICES, INC. Income Statement For the year ended December 31, current year Revenues Counseling revenue Expenses: Advertising expense Salaries expense 97,000 Office supplies expense Utilities expense Malpractice insurance...
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