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Chapter 3: Q14E (page 134)

(LO5) (Closing Entries) Presented below is information related to Gonzales Corporation for the month of January 2017.

Cost of Goods sold \( 208,000 Salaries and wages expenses \)61,000

Delivery expenses \( 7,000 Sales discounts \) 8,000

Insurance expenses \( 12,000 Sales returns and allowances \)13,000

Rent expenses \( 20,000 Sales revenue \)350,000

Instructions:

Prepare the necessary closing entries.

Short Answer

Expert verified

The total amount of income summary expenses is $329,000.

Step by step solution

01

Meaning of Journal entry

The journal entry is the act of keeping a record of any transactions and events either economic or non-economic. The recording of journal entry, includes Serial number or transaction number, Date, Accounts titles and explanations, debit and credit, and narrations.

02

Journal Entries

The necessary closing entries for the above information are as follows:


Closing Entries

No.

Date

Accounts Titles and Explanations

Debit

Credit

1

Jan 31

Sales Revenue

$ 350,000

Income Summary

$ 350,000

2

Jan 31

Income Summary

$ 329,000

Cost of goods sold

$ 208,000

Delivery Expenses

$ 7,000

Insurance Expenses

$ 12,000

Rent Expenses

$ 20,000

Salaries and wages expenses

$ 61,000

Sales discounts

$ 8,000

Sales returns and allowances

$ 13,000

3

Jan 31

Income Summary

$ 21,000

Retained Earnings

$ 21,000

Working notes:

1) Sales Revenue = $350,000 (Given)

2) Income Summary = ($208,000+$7,000+$12,000+$20,000+$61,000+$8,000+$13,000)

= $329,000

3) Retained earnings = ($350,000 - $329,000) = $21,000

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Most popular questions from this chapter

(L09) (Worksheet) Presented below are the selected accounts for Alvarez Company as reported in the worksheet at the end of May 2017.

ALVAREZ CO.

Worksheet

For The Month Ended May 31, 2017

Adjusted

Trial Balance

Income

Statement

Balance

Sheet

Accounts Titles

Dr.

Cr.

Dr.

Cr.

Dr.

Cr.

Cash

9,000

Inventory

80,000

Sales Revenue

450,000

Sales returns and allowances

10,000

Sales Discounts

5,000

Cost of Goods Sold

250,000

Instructions:

Complete the worksheet by extending the amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns.

E3-6 (L03) (Adjusting Entries) Karen Weller, D.D.S., opened a dental practice on January 1, 2017. During the first month ofoperations, the following transactions occurred.1. Performed services for patients who had dental plan insurance. At January 31, \(750 of such services was performed but notyet billed to the insurance companies.2. Utility expenses incurred but not paid prior to January 31 totaled \)520.3. Purchased dental equipment on January 1 for \(80,000, paying \)20,000 in cash and signing a \(60,000, 3-year note payable.The equipment depreciates \)400 per month. Interest is \(500 per month.4. Purchased a one-year malpractice insurance policy on January 1 for \)12,000.5. Purchased \(1,600 of dental supplies. On January 31, determined that \)500 of supplies were on hand.InstructionsPrepare the adjusting entries on January 31. (Omit explanations.) Account titles are Accumulated Depreciation—Equipment,Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, PrepaidInsurance, Supplies, Supplies Expense, Utilities Expenses, and Accounts Payable.

“A worksheet is a permanent accounting record, and its use is required in the accounting cycle. “Do you agree? Explain.

LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee (tenant) for 3 months for a total cash payment of $2,400 received in advance. Prepare LaBouche’s November 1 journal entry and the December 31 annual adjusting entry.

Name the accounts debited and credited for each of the following transactions.

  1. Billing a customer for work done.
  2. Receipt of cash from customer on account.
  3. Purchase of office supplies on account.
  4. Purchase of 15 gallons of gasoline for the delivery of truck.
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