Question

Closing Entries DO IT! 2 blowing mas in selected accounts of its and $7.000 000 22.000 Dividends Reained Eamings Accounts Receivable $15.000 42.000 38.000 7000 Salaries and Wages Expense 51.000 Pre the closing entries at December 31 ending balance of Retained Earrings on December 31? LO 2

Answer 1

1.

Closing entries are as below:

Date	Account titles and explanation	Ref.	Debit	Credit
Dec.31	Income summary		$80,000
	Rent expense			$22,000
	Supplies expense			$7,000
	Salaries and wages expense			$51,000
	To record closing of various expenses accounts.
Dec.31	Service revenue		$96,000
	Income summary			$96,000
	To record closing of revenue account.
Dec.31	Income summary		$16,000
	Retained earnings			$16,000
	To record closing of net income, which is (96,000 – 80,000 =) $16,000.
Dec.31	Retained earnings		$15,000
	Dividends			$15,000
	To close dividends through retained earnings.

Note: other figures are not relevant in closing entries.

2.

Ending retained earnings = Beginning retained earnings + Net income – Dividends

                                         = 42,000 + 16,000 – 15,000

                                         = $43,000 (Answer)