Question

On March 31, 2018, the balances of the accounts appearing in the ledger of Royal Furnishings Company, a furniture wholesaler, are as follows: Accounts Receivable $ 170,000 Accumulated Depreciation—Building 750,000 Administrative Expenses 435,000 Building 3,500,000 Cash 80,000 Common Stock 300,000 Cost of Goods Sold 5,500,000 Dividends 175,000 Interest Expense 15,000 Inventory 980,000 Notes Payable 250,000 Office Supplies 20,000 Retained Earnings 1,987,000 Salaries Payable 8,000 Sales 8,245,000 Selling Expenses 575,000 Store Supplies 90,000 Journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Solution:

Journal Entries - Royal Furnishing
Date	Particulars	Debit	Credit
31-Mar-18	Sales Dr	$8,245,000.00
	To Income Summary		$8,245,000.00
	(To close revenue account to income summary)
31-Mar-18	Income Summary Dr	$6,525,000.00
	To Administrative expenses		$435,000.00
	To Cost of goods sold		$5,500,000.00
	To Interest expense		$15,000.00
	To Selling expenses		$575,000.00
	(To close expenses account)
31-Mar-18	Income Summary Dr	$1,720,000.00
	To Retained earnings		$1,720,000.00
	(To close net income to retained earnings)
31-Mar-18	Retained Earnings Dr	$175,000.00
	To Dividends		$175,000.00
	(To close dividend to retained earnings)