James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaw’s first year of operations:
PAGE 1
GENERAL JOURNAL
IMPACT ON FINANCIAL STATEMENTS
INCOME STATEMENT
BALANCE SHEET
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | REVENUE | EXPENSES | NET INCOME | |
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1 |
Closing Entries |
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2 |
Dec. 31 |
Income Summary |
210,000.00 |
↓ |
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3 |
Service Revenue |
177,000.00 |
↑ |
↑ |
↑ |
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4 |
Accumulated Depreciation |
33,000.00 |
↓ |
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5 |
31 |
Depreciation Expense |
33,000.00 |
↓ |
↑ |
↓ |
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6 |
Income Taxes Expense |
8,200.00 |
↓ |
↑ |
↓ |
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7 |
Utilities Expense |
12,700.00 |
↓ |
↑ |
↓ |
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8 |
Wages Expense |
66,000.00 |
↓ |
↑ |
↓ |
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9 |
Supplies Expense |
31,000.00 |
↓ |
↑ |
↓ |
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10 |
Accounts Payable |
4,500.00 |
↓ |
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11 |
Income Summary |
155,400.00 |
↑ |
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12 |
31 |
Income Summary |
54,600.00 |
↓ |
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13 |
Retained Earnings |
54,600.00 |
↑ |
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14 |
31 |
Dividends |
3,200.00 |
↓ |
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15 |
Income Summary |
3,200.00 |
↑ |
Required:
Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct. |
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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General Journal
Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct.
General Journal Instructions
Refer to the Chart of Accounts for the exact wording of the account titles.
CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries.
CNOW journals will automatically indent a credit entry when a credit amount is entered.
Select an up ↑ or down ↓ arrow to show the impact on the financial statements. Be sure to include an arrow in Net Income and Equity when Revenue or Expenses are affected.
PAGE 1
GENERAL JOURNAL
IMPACT ON FINANCIAL STATEMENTS
INCOME STATEMENT
BALANCE SHEET
DATE | ACCOUNT TITLE | POST. REF. | DEBIT | CREDIT | ASSETS | LIABILITIES | EQUITY | REVENUE | EXPENSES | NET INCOME | |
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1 |
Closing Entries |
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Closing entries are the entries passed for closing the temporary accounts (Revenue and Expenses Accounts) at the end of the accounting period. They are done after the financial statement for the accounting year has been prepared. This is done to make the temporary accounts zero so that these temporary accounts begins with zero balance in the next accounting period. |
Closing credit/debit entry is passed in all temporary accounts having debit balance/credit balance before passing the closing entry. The credit /debit amount entered is equal to the debit/credit balance prior to passing the closing entry. |
The net amount of closing entries is the Net Income /(Loss) for the period which is ultimately transferred to retained earnings. |
James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the...
Preparation of Closing Entries James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaw's first year of operations: Income Summary 211,000 Service Revenue 178,000 Accumulated Depreciation 33,000 33,000 8.200 Depreciation Expense Income Taxes Expense Utilities Expense Wages Expense Supplies Expense Accounts Payable 11,600 66,000 31,000 4,500 Income Summary 154,300 56,700 Income Summary Retained Earnings...
Exercise 3-60 (Algorithmic) Preparation of Closing Entries James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaw's first year of operations: Income Summary 201,000 Service Revenue 168,000 Accumulated Depreciation 33,000 Depreciation Expense 33,000 Income Taxes Expense 8,200 Utilities Expense 12,100 Wages Expense 66,000 Supplies Expense 31,000 Accounts Payable 4,500 Income Summary 154,800 Income Summary...
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Roth Contractors Corporation was incorporated on December 1, 2019 and had the following transactions during December: PART B Here are answers to part A along with the instructions. Part B The following information relates to December 31, 2019: o. One month of the prepaid insurance has expired. p. The December portion of the rent paid on December 1 has expired. q. A physical count indicates that $350 of supplies is still on hand. r. The amount collected in transaction m...
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Instructions Barnes Company uses a job order cost system. The following data summarize the operations related to production for October: October 1 2 31 31 31 Materials purchased on account, $645,190. Materials requisitioned, $642,250, of which $72,680 was for general factory use. Factory labor used, $631,920, of which $91,350 was indirect. Other costs incurred on account for factory overhead, $153,030; selling expenses, $228,490; and administrative expenses, $150,890. Prepaid expenses expired for factory overhead were $29,630; for selling expenses, $26,950; and...