Question

Using the information from the Adjusted Trial Balance, journalize the closing entries for the end of the month.
Activity 3.a - Journalize Closing Entries Using the information from the Adjusted Trial Balance, journalize the closing entries for the end of the month. SMART TOUCH LEARNING Date Accounts and Explanation Debit Credit Adjusted Trial Balance December 31, 2016 Balance Debit Credit Account Title Cash 17,900 Accounts Receivable 9,900 Date Accounts and Explanation Debit Credit Office Supplies 200 Prepaid Rent 11,900 Furniture 20,900 Accumulated Depreciation- 7,100 Furniture Accounts Payable 2,300 Salaries Payable 500 Interest Payable 300 Unearned Revenue 5,900 Notes Payable 8,300 Date Accounts and Explanation Debit Credit Common Stock 11,700 54,600

Answer 1

Answer

• Requirement asked

Closing entries

Date	Accounts title	Debit	Credit
31-Dec	Service Revenue	$54,600
	Income Summary		$54,600
	(to close revenues)
31-Dec	Income Summary	$11,100
	Depreciation expense - Furniture		$2,300
	Interest Expense		$300
	Rent Expense		$3,500
	Salaries Expense		$4,100
	Supplies Expense		$900
	(to close expenses)
31-Dec	Income Summary	$43,500
	Retained earnings		$43,500
	(to close Income Summary - Net Income)
31-Dec	Retained earnings	$30,700
	Dividends		$30,700
	(to close dividend)

• Concepts

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.