Question

can someone please explain this and provdie the correct answer. I dont understand):

6. After all adjusting entries have been made and the financial statements have been prepared at the end of the fiscal year, salaries expenses has a debit of $305,500, supplies expense has a debit of $208,000, rent expense has a debit of $95,000, insurance expense has a debit of $87,000, and revenue has a credit of $839,000. At the same date, retained earnings has a credit balance of $319,500 and dividends has a balance of $25,000. A. Journalize the entries required to complete the closing of the accounts B. Determine the balance of Retained Earnings at the end of the period

Answer 1

At year-end, all the expenses and income will be transferred to the profit & loss account.

For transferring expenses, we will debit P&l A/c and credit particular expense A/c.

For transferring income, we will credit P&l A/c and debit a particular income A/c.

A.Journal entries:

Profit & Loss A/c Dr. 695500

to salaries expense A/c 305500

to supplies expense A/c 208000

to rent expense A/c 95000

to insurance expense A/c 87000

(Being expenses transferred to P&L A/c)

Revenue A/c Dr. 839000

to Profit & Loss A/c 839000

(Being income transferred tp P&L A/c)

Dividend A/c Dr. 25000

to Retained earning A/c 25000

(Being dividend paid)

B.Balance of retained earnings:

salaries expense	305500
supplies expense	208000
rent expense	95000
insurance expense	87000
	695500
revenue	839000
Profit	143500

Opening balance = 319500

+ profit =143500

-dividends = 25000

Balance of retained earning at the end of period = 319500+143500-25000 = 438000