Question

DB 3.6-Closing Entries Serena Corp. has year-end account balances as follows: Sales Interest Revenue Cost of Goods Sold Salaries and Wages Expense Depreciation Expense Advertising Expense Utilities Expense Insurance Expense Income Tax Expense Dividends $808,900 13,500 556,200 100,000 30,000 25,000 15,000 14,000 40,100 18,900 Required: Prepare closing entries in proper journal entry form) for Serena Corp. on December 31st. (Note: Our textbook discuss closing entries and provides examples on p. 31-32 of Chapter 3.)

Answer 1

	Journal entries
No.	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
1	Sales Revenue	808,900.00
	Interest Revenue	13,500.00
	Income Summary		822,400.00
	(To close accounts with credit balances)
2	Income Summary	780,300.00
	Cost of goods sold		556,200.00
	Salaries and Wages Expense		100,000.00
	Depreciation Expense		30,000.00
	Advertising Expense		25,000.00
	Utilities Expense		15,000.00
	Insurance Expense		14,000.00
	Income Tax Expense		40,100.00
	(To close accounts with debit balances)
3	Income Summary (822,400-780,300)	42,100.00
	Retained Earnings		42,100.00
	(To close net income / (loss))
4	Retained Earnings	18,900.00
	Dividends		18,900.00
	(To close dividends)