Question

These partially completed Income Statement columns from a 10-column work sheet are for Brown’s Bike Rental Company.
  

Account Title	Debit		Credit
Rent earned			138,000
Salaries expense	61,272
Insurance expense	8,694
Office supplies expense	20,286
Bike repair expense	4,278
Depreciation expense—Bikes	26,358

  
(1) Use the information to determine the amount that should be entered on the net income line of the work sheet.

(2)Prepare the company's closing entries. The owner, H. Brown, did not make any withdrawals this period.

Answer 1

1. Income Statement

Brown's Bike Rental Company Income Statement
Revenue :-
Rent Earned		$138,000
Expenses:-
Salaries Expense	$61,272
Insurance Expense	8,694
Office Supplies Expense	20,286
Bike Repair Expense	4,278
Depreciation Expense - Bike	26,358
Total Expenses		$(120,888)
Net Income		$ 17,112

2. Closing Entries

S No.	Accounts Title and Explanation	Debit	Credit
1.	Rent Earned	138,000
	Income Summary		138,000
	(To Close Revenues)
2.	Income Summary	120,888
	Salaries Expense		61,272
	Insurance Expense		8,694
	Office Supplies Expense		20,286
	Bike Repair Expense		4,278
	Depreciation Expense - Bike		26,358
	(To Close Expenses to Income Summary)
3.	Income Summary	17,112
	Retained Earnings		17,112
	(To Close Income to Retained Earnings)