Question

Selected accounts for Kebby Photography at December 31, 2018, follow: Retained Earnings 49,000 Service Revenue Dividends 14,000 33,000 4,500 Salaries Expense 31,800 1,400 Supplies Expense 2,700 Depreciation Expense-Building 7,000 Depreciation Expense-Furniture 1,500

Answer 1

1) Closing entries of Kebby photography on 31 Dec,2018

DEBIT CREDIT

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a. Service Revenue (33,000 + 4,500 ) 37,500

Income summary 37,500

( Being closing entry made for revenue account)

b. Income Sunmmary    44,400

Salaries expense (31,800 + 1,400) 33,200

Supplies expense 2,700

Depreciation expense - Building     7,000

Depreciation expense - Furniture 1,500

(Being closing entry made for expenses account)

c. Retained Earnings [44,400 - 37,500] 6,900

Income Summary ( loss)    6,900

( Being loss transferred to Retained earnings)

d. Retained earnings 14,000

Dividends 14,000

(Being dividends reduced from Retained Earnings)

2) Retained Earnings balance on 31 Dec., 2018

Opening Balance 49,000

Less: Current year loss 6,900

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42,100

less :Dividend 14,000

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28,100

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So, the balance of retained earnings on 31,December 2018 is 28,100