Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 4: Q10SE (page 219)

Brett Teddy Enterprises had the following accounts and normal balances listed on its December 31st adjusted trial balance: Service Revenue, \(21,900; Salaries Expense, \)6,000; Rent Expense, \(4,400; Advertising Expense, \)3,100; and Dividends, $6,900. Journalize the closing entries for Teddy Enterprises.

Short Answer

Expert verified

Closing entries are as follows:

Journal entry

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Service Revenue

$21,900

Income Summary

$21,900

To close revenue.

Dec. 31

Income Summary

$13,500

Salaries Expense

$6,000

Rent Expense

$4,400

Advertising Expense

$3,100

To close expenses.

Dec. 31

Income Summary

$8,400

Retained Earnings

$8,400

To close Income Summary

Dec. 31

Retained Earnings

$6,900

$6,900

Dividends

To close Dividends

Step by step solution

01

Explanation on Closing Entry

Closing entry is recorded at the end of the period to close balances of permanent account.

02

Calculation of net income

Net income is calculated as follows:

NetIncome=TotalRevenues-TotalExpenses=$21,900-$13,500=$8,400

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Winters Landscape Services accrued \(4,000 of Salaries Expense at December 31. Winters paid the next payroll at January 10 of

\)6,000. This payment included the accrued amount at December 31, plus $2,000 for the first few days of January.

25A. Journalize the cash payment

The adjusted trial balance of Erickson Real Estate Appraisal at June 30, 2018, follows:


Requirements

1. Prepare the company’s income statement for the year ended June 30, 2018.

2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018.

3. Prepare the company’s classified balance sheet in report form at June 30, 2018.

4. Journalize the closing entries.

5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts.

6. Prepare the company’s post-closing trial balance at June 30, 2018.

The unadjusted trial balance of Watson Anvils at December 31, 2018, and the data for the adjustments follow: WATSON ANVILS Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equiment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Dividends Common Stock Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Total Balance \( 13,560 \) 72,400 \( 72,400 5,600 4,600 12,000 Retained Earnings 17,600 19,000 17,000 2,140 2,800 \) 11,000 7,200 30,000 2,300. Adjustment data: a. Unearned Revenue still unearned at December 31, \(3,600. b. Prepaid Rent still in force at December 31, \)2,000. c. Office Supplies used, \(600. d. Depreciation, \)400. e. Accrued Salaries Expense at December 31, $180. Requirements 1. Open the T-accounts using the balances in the unadjusted trial balance. 2. Complete the worksheet for the year ended December 31, 2018 (optional). 3. Prepare the adjusting entries, and post to the accounts. 4. Prepare an adjusted trial balance. 5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 6. Prepare the closing entries, and post to the accounts. 7. Prepare a post-closing trial balance. 8. Calculate the current ratio for the company.

The adjusted trial balance of Rocket Real Estate Appraisal at June 30, 2018, follows: ROCKET REAL ESTATE APPRAISAL Adjusted Trial Balance June 30, 2018Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Land Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Balance \( 5,000 \) 178,100 \( 178,100 12,800 \) 25,200 71,000 8,000 1,000 2,100 37,000 25,800 5,500 1,600 1,700 18,700 5,000 33,000 48,100 4,100 32,000 600 8,000 2,900 7,100 Utilities Expense Depreciation Expense—Building Total . Requirements 1. Prepare the company’s income statement for the year ended June 30, 2018. 2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018. 3. Prepare the company’s classified balance sheet in report form at June 30, 2018. 4. Journalize the closing entries. 5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts. 6. Prepare the company’s post-closing trial balance at June 30, 2018.

Answer the following questions: Requirements 1. What type of normal balance does the Retained Earnings account have—debit or credit? 2. Which type of income statement account has the same type of balance as the Retained Earnings account? 3. Which type of income statement account has the opposite type of balance as the Retained Earnings account? 4. What do we call the difference between total debits and total credits on the income statement section of the worksheet?
See all solutions

Recommended explanations on Business Studies Textbooks

Business Case Studies

Read Explanation

Organizational Behavior

Read Explanation

Intermediate Accounting

Read Explanation

Change Management

Read Explanation

Organizational Communication

Read Explanation

Managers

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free