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! 13 Required information CP4-1 Preparing an Adjusted Trial Balance, Closing Journal Entry, and Post-Closing Trial Balance [L
2. Prepare the closing entry required at September 30, 2018. (If no entry is required for a transaction/event, select No Jou
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Answer #1

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  • Closing entry [single] asked

Accounts title

Debit

Credit

Sales Revenue

$325,400

Retained earnings [balance]

$15,920

Income tax expense

$10,490

Office Expenses

$6,290

Rent Expenses

$164,100

Salaries & Wages expense

$128,600

(to close revenue and expense accounts)

General Concepts regarding Closing entries:

#1:Temporary accounts, like Revenue accounts, have normal CREDIT balances, and hence they are closed by DEBITING the account.

#2:Temporary accounts, like Expense accounts or Contra revenue accounts, have normal DEBIT balances, and hence they are closed by CREDITING the account.

#3: In case of Net Income, Income Summary account has a CREDIT balance, and in order to close the Income Summary account, we DEBIT the account, and Credit Retained earnings/Owner's Capital

#4: In case of Net Loss, Income Summary account has a DEBIT balance, and in order to close the Income Summary account, we CREDIT the account, and Debit Retained earnings/Owner's Capital

#5: Dividend accounts have normal DEBIT balance, and are closed by CREDITING them, and debiting Retained earnings account.

#6: Drawings or Withdrawal account have a normal DEBIT balance, and hence closed by CREDITING the account, and debiting Owner's Capital account.

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