Question

[The following information applies to the questions displayed below.) On January 1, 2021, Red Flash Photography had the following balances: Cash, $28,000; Supplies $9.600; Land, $76,000: Deferred Revenue, $6,600: Common Stock $66,000; and Retained Earnings, $41,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $36,000. 2. May 20 Provide services to customers for cash, $51,000, and on account, $46,000 3. August 31 Pay salaries to employees for work in 2021, $39,000. 4. October 1 Purchase rental space for one year, $28,000. 5. November 17 Purchase supplies on account, $38,000. 6. December 30 Pay dividends, $3,600. The following information is available on December 31, 2021 1. Employees are owed an additional $5,600 in salaries, 2. Three months of the rental space has expired. 3. Supplies of $6,600 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed.

Answer 1

1) Record the entries to close the Revenue Accounts

Date	Journal Entries	Debit	Credit
Dec 31, 2021	Deferred Revenue A/c	$6,600
	Service Revenue A/c		$6,600
	[To close Revenue Accounts]

2) Record the entries to close the Expense Accounts

Date	Journal Entries	Debit	Credit
Dec 31, 2021	Salaries Expense A/c	$5,600
	Rent Expense A/c ($28,000 * (3/12))	$7,000
	Supplies Expense A/c ($9,600 +$38,000 - $6,600)	$41,000
	Salaries Payable A/c		$5,600
	Prepaid Rent A/c		$7,000
	Supplies A/c		$41,000
	[To close Expense Accounts]

3) Record the entries to close the Dividens Accounts

Date	Journal Entries	Debit	Credit
Dec 31, 2021	Retained Earnings A/c	$3,600
	Dividends A/c		$3,600
	[To close Dividends Account]