Question

From the following partial work sheet for Walter Searing, Journalize the closing entries necessary for month-end and prepare a post-closing trial balance. Walter Searing Work Sheet (Partial) For Month Ended July 31, 20-- Income Statement Balance Sheet Account Title Debit Credit Debit Credit Cash 3,700 Accounts Receivable 600 Supplies 800 Prepaid Insurance 800 Delivery Equipment 4,000 Accum. Depr.-Delivery 200 Equip. Accounts Payable 1,100 Wages Payable 1,025 Walter Searing, Capital 6,965 Walter Searing, Drawing 900 Delivery Fees 6,400 Rent Expense 1,600 Wages Expense 1,100 Utilities Expense 300 Gas and Oil Expense 750 Miscellaneous Expense 300 Supplies Expense 240 Insurance Expense 400 Depr. Exp.-Delivery Equip. 200 4,890 6,400 10,800 9,290 Net Income 1.510 1,510 6,400 6,400 10.800 10,800

Answer 1

The closing journal entries will be as under:

Date	Description	Debit ($)	Credit ($)	Notes
Jul-31	Delivery Fees	6400		To close revenue accounts
	Income Summary		6400
Jul-31	Income Summary	4890		To close expense accounts
	Rent Expense		1600
	Wages Expense		1100
	Utilities Expense		300
	Gas & Oil Expense		750
	Misc. Expense		300
	Supplies Expense		240
	Insurance expense		400
	Depr. Exp. - Delivery Equip.		200
Jul-31	Income Summary	1510		To close Income summary account
	Retained Earnings or Walter Searing Capital account		1510
Jul-31	Retained Earnings or Walter Searing Capital account	900		To close drawing account
	Walter Searing Drawing account		900

Notes

The closing entries include closing of revenues and expenses accounts. The revenues and expenses are closed into Income summary and income summary is then closed into retained earnings or capital account.

For a proprietorship firm, the drawings account too is closed into capital account.

Please comment in case of any issue and I will be happy to help.