Question

The following adjusted trial balance contains the accounts and year-end balances of Cruz Company as of December 31. No Account Title 101 Cash 126 Supplies 128 Prepaid insurance 167 Equipment 168 Accumulated depreciation Equipment 307 Common stock 318 Retained earnings 319 Dividends 404 Services revenue 612 Depreciation expense-Equipment 622 Salaries expense 637 Insurance expense 640 Rent expense 652 Supplies expense Totals Debit Credit $19, eee 13, eee 3,000 24,000 $ 7,5ee 10, eee 37,600 7,eee 44,00 3,000 22,000 2,500 3,400 2,200 $99,1ee $99, iee 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 $37,600 on December 31 of the prior year. Complete this questions by entering your answers in the tabs below.

Answer 1

Closing entries are prepared to close the temporary accounts of income and expenses which are part of income statement
Record entry to close revenue accounts
Date	General Journal	Debit	Credit
31-Dec	Service revenue	44000
	Income summary		44000
	(To close revenue account)
Record entry to close expense accounts
Date	General Journal	Debit	Credit
31-Dec	Income summary	$33,100
	Depreciation expense - Equipment		$3,000
	Salaries expense		$22,000
	Insurance expense		$2,500
	Rent expense		$3,400
	Supplies expense		$2,200
	(To close expense account)
Record entry to close income summary account
Date	General Journal	Debit	Credit
31-Dec	Income summary (44000-33100)	$10,900
	Retained earnings		$10,900
	(To close income summary account)
Record entry to close dividend account
Date	General Journal	Debit	Credit
31-Dec	Retained earnings	$7,000
	Dividend		$7,000
	(To close dividend account)
Post closing trial balance
	Post-closing trial balance
		Debit	Credit
	Cash	$19,000
	Supplies	$13,000
	Prepaid insurance	$3,000
	Equipment	$24,000
	Accumulated depreciation - Equipment		$7,500
	Common stock		$10,000
	Retained earnings (37600+10900-7000)		$41,500
	Totals	$59,000	$59,000