Question

The adjusted trial balance for Bay Shore Tax Accountants for the year-ended December 31, 2020 is included below. Only use the information below to answer the question. Do NOT rely on information provided in another question. Bay Shore Tax Accountants Adjusted Trial Balance December 31, 2020 US Dollar Debit Credit $ 40,000 $ 18,000 $ 270,000 $ 86,000 $ 900,000 $ 120,600 $ 720,000 $ 81,000 $ 28,000 $ 330,000 $ 729,000 $ 33,100 $ 72,600 Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Building Cash Common Stock Depreciation Expense Dividends Equipment Fees Earned Interest Expense Insurance Expense Interest Payable Land Miscellaneous Expense Notes Payable Prepaid Insurance Expense Rent Expense Retained Earnings Sales Revenue Supplies Supplies Expense Unearned Sales Revenue Utilities Expense Wages Expense Wages Payable $ 5,800 $ 450,000 $ 10,300 $ 425,000 $ 32,400 $ 81,000 $ 239,400 $ 52,200 $ 104.400 $ 24,700 $ 57,600 $ 8,800 $ 340,200 $ 10,100 2,635,100 $ 2,635,100 $ After completing all closing entries required in the closing process, what is the balance in the Dividends account? $129,500 ($28,000) $340,900 $ 28,000 None of the above.

Answer 1

*Option(E). None of the above is the correct answer.

*Closing Entries: Temporary accounts relate to a given accounting period. It includes all income statement accounts and dividends account. The company closes all temporary accounts(Nominal accounts) at the end of the period.

*Closing entries also produce a zero balance in each temporary account. it prepares only at the end of the annual accounting period. The company creates Income Summary account.

*In preparing closing entries, Company could close Income statements directly to retained earnings. However, Excessive amount results in retained earnings.

*Dividends amount transfer to retained earnings.

*The balance in dividends, revenues, expenses would be zero.

*Dividends is not an expense, and it is not a factor in determining net income.

*Debit, Retained Earnings for the balance in the Dividends account, and credit dividends for the same amount.

	Closing Entries
No.	Account Info	Debit	Credit
1	Fees Earned	$    720,000
	Sales Revenue	$       52,200
	Income Summary		$    772,200
	(To close the revenue account to income summary)
2	Income Summary	$    651,700
	Depreciation Expense		$       81,000
	Interest Expense		$       33,100
	Insurance Expense		$       72,600
	Miscellaneous Expense		$       10,300
	Rent Expense		$       81,000
	Supplies Expense		$       24,700
	Utilities Expense		$          8,800
	Wages Expense		$    340,200
	(To close the expense accounts to income summary)
3	Income Summary	$    120,500
	Retained Earnings		$    120,500
	(To close Income statement to retained earnings )
4	Retained Earnings	$       28,000
	Dividend		$       28,000
	(To close the dividends)

*After completing all closing entries. Balances in the Dividends account is ZERO.

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