Question

Paradise Travel's adjusted trial balance as of the end of its annual accounting period is shown below:

(a) Prepare the necessary closing entries. (b) Prepare a post-closing trial balance.

Paradise Travel Adjusted Trial Balance December 31

	Debit.	Credit
Cash	$ 25,000
Accounts receivable	15,000
Office supplies	4,300
Office equipment	29,600
Accumulated depreciation–Office equipment		$5,000
Long-term notes payable		25,000
D. Chambers, Capital		30,260
D. Chambers, Withdrawals	1,000
Fees earned		75,000
Salaries expense	32,800
Rent expense	16,800
Depreciation expense–Office equipment	3,960
Advertising expense	4,000
Office supplies expense	2,800
Totals	$135,260	$135,260

Answer 1

(a)	Closing entries:
	Date	Particulars					Debit	Credit
	Dec 31.	Fees earned					75000
		Income summary						75000
		(To close revenue)
	Dec 31.	Income summary					60,360
		Salaries expense						32,800
		Rent expense						16,800
		Depreciation expense–Office equipment						3,960
		Advertising expense						4,000
		Office supplies expense						2,800
		(To close expenses)
	Dec 31.	Income summary			(75000-60360)		14640
		D. Chambers, Capital						14640
		(To close income summary)
	Dec 31.	D. Chambers, Capital					1000
		D. Chambers, Withdrawals						1000
		(To close withdrawals)
(b)		Paradise Travel
		Post-closing Trial Balance
		Dec 31.
						Debit	Credit
	Cash					$25,000
	Accounts receivable					15,000
	Office supplies					4,300
	Office equipment					29,600
	Accumulated depreciation–Office equipment						$5,000
	Long-term notes payable						25,000
	D. Chambers, Capital		(30260+14640-1000)				43900
	Totals					$73,900	$73,900