Question

Robert Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31.

	Account No.	Debit Balances	Credit Balances
Cash	11	1,500
Accounts Receivable	12	2,000
Interest Receivable	13	100
Prepaid Insurance	14	1,600
Notes Receivable (long-term)	16	2,800
Equipment	18	15,000
Accumulated Depreciation	19		3,000
Accounts Payable	21		2,400
Accrued Expenses Payable	22		3,920
Income Taxes Payable	23		2,700
Unearned Rent Fees	24		500
Robert Evans, Capital	31		13,700
Robert Evans, Drawing	32	2,000
Rent Fees Earned	41		31,000
Furniture Rental Revenue	42		1,200
Interest Revenue	43		100
Wages Expense	51	19,000
Depreciation Expense	52	1,800
Utilities Expense	53	320
Insurance Expense	54	700
Maintenance Expense	55	9,000
Income Tax Expense	56	2,700
		58,520	58,520

Prepare the closing entry required to transfer the income or loss at the end of the period. If an amount box does not require an entry, leave it blank.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Robert Evans, Capital       [Refer working note]	$1,220
	Income summary		$1,220
	(To transfer net loss)

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Working note - Computation of income/(loss)
	Amount	Amount
Revenue:
Rent Fees Earned	$31,000
Furniture Rental Revenue	$1,200
Interest Revenue	$100
Total revenue		$32,300
Expenses:
Wages Expense	$19,000
Depreciation Expense	$1,800
Utilities Expense	$320
Insurance Expense	$700
Maintenance Expense	$9,000
Income Tax Expense	$2,700
Total expenses		$33,520
Net Income / (Loss)              [Total revenue - Total expenses = $32,300 - $33,250]		($1,220)