Question

The company's adjusted trial balance includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Retained earnings, $59,000; Dividends, $2,000; Fees Earned, $56,000; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances.

Prepare the third closing entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Answer 1

Third Closing Entry is to transfer Net Income / Net Loss to Retained Earnings

Date	Particulars	Debit	Credit
	Income Summary A/C...Dr	8,000
	To Retained Earnings		8,000
	(To Close Net Income)

Notes

Net Income / (Loss) = Fees Earned - Depreciation Expense - Salaries Expense

Fees Earned = $ 56,000

Depreciation Expense = $ 25,000

Salaries Expense = $ 23,000

Net Income / (Loss) = 56,000 - 25,000 - 23,000

Net Income = $ 8,000