Question

Required information (The following information applies to the questions displayed below.) On January 1 2021, Red Flash Photography had the following balances Cash, $17.000; Supplies, $8,500, Land, $65,000; Deferred Revenue $5,500, Common Stock $55,000; and Retained Earnings, $30,000. During 2021, the company had the following transactions 1. February 15 Issue additional shares of common stock, $25,eee. 2. May 20 Provide services to customers for cash, $40,000, and on account, $35,000 3. August 31 Pay salaries to employees for work in 2021, $28,eee. 4. October 1 Purchase rental space for one year, $17,eee. 5. November 17 Purchase supplies on account, $27,000 6. December 30 Pay dividends, $2,500. The following information is available on December 31, 2021 1. Employees are owed an additional $4,500 in salaries. 2. Three months of the rental space has expired 3. Supplies of $5,500 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed

Answer 1

5) Closing Entries
Date	General Journal	Debit	Credit
Dec. 31, 2021	Service Revenue ($40,000 + $35,000 + $5,500)	$80,500
	Income Summary		$80,500
	(To close revenue accounts)
Dec. 31, 2021	Income Summary	$66,750
	Salaries Expense ($28,000 + $4,500)		$32,500
	Rent Expense ($17,000/12 months * 3 months)		$4,250
	Supplies Expense ($8,500 + $27,000 - $5,500)		$30,000
	(To close expense accounts)
Dec. 31, 2021	Income Summary ($80,500 - $66,750)	$13,750
	Retained Earnings		$13,750
	(To close the net income to retained earnings)
Dec. 31, 2021	Retained Earnings	$2,500
	Dividends		$2,500
	(To close the dividends account)

Note: The net income should also be closed before closing the dividends.