Question

The adjusted trial balance for China Tea Company at December 31, 2021. is presented below: Credit Debit 18,500 150,000 5,000 25,000 зеееее Cash Accounts receivable Prepaid rent Inventory Equipment Accumulated depreciation equipment Accounts payable Notes payable-due in three months Salaries payable Interest payable Common stock Retained earnings Dividends Sales revenue costs of goods sold Salaries expense Rent expense Depreciation expense Interest expense Advertising expense Totals 125,000 30.000 30,000 4,000 9.000 200,000 50,000 8.000 400,000 180,000 120,000 15,000 30.oe 2.ee 2,500 848.000 848,000 Required: Prepare the closing entries for China Tea Company for the year ended December 31, 2021. (if no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 > Record the entry to close the revenue accounts. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal

Answer 1

CLOSING JOURNAL ENTRIES:

Date	Account Title and Explanation	Debit $	Credit $
Dec.31, 2021	Sales Revenue	400,000
	Retained Earnings		400,000
	(Being revenue account closed)
Dec.31, 2021	Retained Earnings	349,500
	Cost of goods sold		180,000
	Salaries expense		120,000
	Rent expense		15,000
	Depreciation expense		30,000
	Interest expense		2,000
	Advertising expense		2,500
	(Being expense accounts closed)
Dec.31, 2021	Retained Earnings	8,000
	Dividend		8,000
	(Being dividend account closed)

INCOME STATEMENT:

CHINA TEA COMPANY INCOME STATEMENT For the year ended December 31, 2021
Sales Revenue		400,000
Less: Cost of goods sold		(180,000)
Gross Profit		220,000
Less: Operating expenses:
Salary expense	120,000
Rent expense	15,000
Depreciation expense	30,000
Interest expense	2,000
Advertising expense	2,500
Total Operating expenses		(169,500)
NET PROFIT		50,500

BALANCE SHEET:

CHINA TEA COMPANY BALANCE SHEET As at December 31, 2021
Assets:
Current assets :
Cash	10,500
Accounts receivable	150,000
Prepaid rent	5,000
Inventory	25,000
Total current assets		190,500
Property, Plant and Equipment :
Equipment	300,000
Less: Accumulated depreciation -equipment	125,000
Total Property, Plant and Equipment		175,000
Total Assets		365,500
Liabilities and Shareholder's Equity:
Liabilities :
Current liabilities -
Accounts payable	30,000
Notes payable	30,000
Salaries payable	4,000
Interest payable	9,000
Total current liabilities		73,000
Non-current liabilities :		0
Total liabilities		73,000
Shareholder's Equity :
Share Capital	200,000
Retained Earnings (Working)	92,500
Total Shareholder's Equity		292,500
Total Liabilities and Shareholder's Equity		365,500

Workings:

Statement of retained earnings :

CHINA TEA COMPANY STATEMENT OF RETAINED EARNINGS For the year ended December 31, 2021
Opening balance of retained earnings	50,000
(+) Net Profit for the year	50,500
(-) Dividends	8,000
Closing balance of retained earnings	92,500

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