Question

Closing Entries with Net Income

Automation Services Co. offers its services to companies desiring to use technology to improve their operations. After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Automation Services:

Fees Earned	$614,500
Dividends	45,000
Rent Expense	140,000
Retained Earnings	3,250,000
Supplies Expense	18,200
Wages Expense	320,000
Miscellaneous Expense	8,700

Journalize the closing entries. If an amount box does not require an entry, leave it blank.

Journalize the closing entries. If an amount box does not require an entry, leave it blank. Dec. 31 Fees Earned . 614,500 Wages Expense 320,000 Rent Expense 140,000 Supplies Expense 18,200 Miscellaneous Expense 8,700 Retained Earnings Dec. 31 Retained Earnings Dividends

Answer 1

Ans.
Date	General Journal	Debit	Credit
31-Dec	Fees earned	$614,500
	Rent expense		$140,000
	Supplies expenses		$18,200
	Wages expenses		$320,000
	Miscellaneous expenses		$8,700
	Retained earnings		$127,600
	(To close revenue and expenses account)
31-Dec	Retained earnings	$45,000
	Dividends		$45,000
	(To close dividends account)
	*Calculations of Net income:
	Particulars	Amount	Amount
	Fees earned	$614,500
	Total revenue (a)		$614,500
	Less: Expenses:
	Rent expense	$140,000
	Supplies expenses	$18,200
	Wages expenses	$320,000
	Miscellaneous expenses	$8,700
	Total expenses (b)		$486,900
	Net Income (a - b)		$127,600