Question

Exercise 3-10 Preparing closing entries and a post-closing trial balance LO P7, P8 The following adjusted trial balance contains the accounts and year-end balances of Cruz Company as of December 31. No. Account Title Debit Credit 101 Cash $18,000 126 Supplies 9,800 128 Prepaid insurance 2,000 167 Equipment 23,000 168 Accumulated depreciation-Equipment $ 6,500 307 Common stock 9,790 318 Retained earnings 35,600 319 Dividends 6,000 404 Services revenue 32,400 612 Depreciation expense-Equipment 2,000 622 salaries expense 18,889 637 Insurance expense 1,361 640 Rent expense 2,171 652 Supplies expense 1,069 Totals $84,290 $84,290 1. Prepare the December 31, closing entries for Cruz Company, Assume the account number for Income Summary is 901. 2. Prepare the December 31, post-closing trial balance for Cruz Company. Note: The Retained Earnings account balance was $35,600 on December 31 of the prior year.

Answer 1

Answer of Requirement 1: + Credit Date Dec. 31 Debit 32,400 32,400 Dec. 31 25,490 General Journal Services Revenue Income Summary (To close revenue account) Income Summary Depreciation Expense-Equipment Salaries Expense Insurance Expense Rent Expense Supplies Expense (To close expense account) Income Summary Retained Earnings (To close net income account) Retained Earnings Dividend (To close Dividend account) 2,000 18,889 1,361 2,171 1,069 Dec. 31 6,910 6,910 Dec. 31 6,000 6,000

Answer of Requirement 2: CRUZ COMPANY Post-Closing Trial Balance Dec-31 Debit Credit Cash 18000 Supplies 9800 Prepaid Insurance 2000 Equipment 23000 Accumulated Depreciation-Equipment 6500 Common Stock 9790 Retained Earnings 36510 Total 52800 52800

Ending Retained Earnings = Beginning Retained Earnings + Net Income – Dividend
Ending Retained Earnings = $35,600 + $6,910 - $6,000
Ending Retained Earnings = $36,510