Question

Section B: Short Exercises (10 Marks) B1 - At December 31, 2019, account balances after adjustments for Smith Company are as follows: [AR1: 5 marks] Account Balances $ 10,500 1,500 18,750 4,500 6,375 1,875 7,500 3,000 42,750 7,050 1,500 9,750 9,000 1,950 Accounts Cash Supplies Equipment Accumulated Depreciation-Equipment Notes Payable Accounts Payable Smith's, Capital Smith's, Drawings Service Revenue Advertising Expense Depreciation Expense Rent Expense Salaries Expense Utilities Expense Required: Prepare the closing entries for Smith Company at December 31, 2019.

Answer 1

Closing entries for Smith Company at December 31, 2019

No	Account Titles and Explanation	Debit ($)	Credit ($)
1	Service Revenue A/c	42,750
	To Income Summary A/c		42,750
	[Journal entry to close revenue accounts]
2	Income Summary A/c	29,250
	To Advertising Expenses A/c		7,050
	To Depreciation Expense A/c		1,500
	To Rent Expenses A/c		9,750
	To Salaries Expenses A/c		9,000
	To Utilities Expenses A/c		1,950
	[Journal entry to close expense accounts]
3	Income Summary A/c	13,500
	To Smith’s Capital A/c		13,500
	[Journal entry to close the income summary to Smith’s Capital A/c, ($42,750 - $29,250)]
4	Smith’s Capital A/c	3,000
	To Smith’s Drawings A/c		3,000
	[Journal entry to close the Drawings A/c]