Prepare an adjusted trial balance 6. Explanation How do you close the expense accounts? True or false? Accounts receivable 6,000 | Which of the following statements regarding closing journal entries is correct? Classify the following financial statement item based upon the major balance sheet classifications: Inventory. These accounts carry forward their balances throughout multiple accounting periods. Which of the following is a permanent account? Which of the following is a permanent account? Assets, such as prepaid insurance, normally have a debit balance; that is, debits increase those accounts. What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. When an amount is paid for future rent or insurance services, a firm that is using the cash basis debits an expense account while a firm that is using the accrual basis debits an asset account." d. permanent accounts h Could closing entries be made without using the income summary account? Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. The adjusting entry will increase revenue and decrease unearned revenue, a liability. Retained earnings will increase by $2,550. Capital XXX Drawing XXX b. The Rent Expense account will reflect the rent for those three months of $300 ($100 3). Increase in cash $3,500 and increase in retained earnings $3,500 b. Inc On December 31, 2016, Ditka Inc. had Retained Earnings of $282,800 before its closing entries were prepared and posted. (d) Depreciation expense account. What is the term used to describe the left side of a T-account? Which of the accounts below would be closed by posting a debit to the account? Cash 18,000 | Suppose a company's Income Summary account has a credit balance of $17,000 after closing revenues and expenses. Explanation c. Cash payments. a. The journal entry would be a debit to Salaries Expense and a credit to Salaries Payable. By December 31, the company had rented (used) the office space for three months. Total assets are understated by $200. He is not claimed as a dependent on another taxpayer's return. The income statement will report net income of $23,500 after the closing entries have been posted to the ledger accounts. A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. What is the difference between Allowance for Doubtful Accounts and Bad Debt Expense? Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. Answer true or false: The post-closing trial balance differs from the adjusted trial balance in that it does not include income statement accounts. Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. Should the Dividends account be closed at year-end? A credit to retained earnings of $2,550 (to close the service revenue, interest expense, and operating expenses accounts) will increase retained earnings by $2,550. B. A debit to accounts receivable increases assets and a credit to service revenue increases stockholders' equity (retained earnings). ; income tax expense $35,100; and dividends $18,900. Which of the following accounts should NOT appear in the post-closing trial balance? On the right side of the Supplies T-account Which of the following statements about the closing process is correct? C) $68,500. No dividends were paid. Bijan Corporation earned $4,000 of revenue that had been deferred. Revenue | 7,500 a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Income Summary is a permanent account only used for the closing process. (c) Prepaid Insurance. Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero balances. Prepare closing entries in journal format and post to the T Accounts. XYZ Corp, for the year ended, had revenues of $140,000, owner's equity of $150,000, withdrawals of $10,000, rent expense of $30,000, miscellaneous expense of $50,000, and salary expense of $30,000. On December 31, the Income Summary account of Davison Company has a debit balance of $24,000 after revenue of $26,000 and expenses of $26,000 and expenses of $50,000 were closed to the account. How would this event be reflected in T-accounts? a. interest expense b. accumulated depreciation c. retained earnings d. unearned revenues. b. Identify whether the account: Rent expenses, is a Temporary Account (Nominal) or a Permanent Account (Real). Prepare the general journal entry to record this transaction. Carla accounted for this asset using the revaluation model, and revalued the building every two years. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. A credit to Insurance Expense for $1,200. A. Cycle, we continue our discussion of the accounting cycle, completing the last steps of journalizing and posting closing entries and preparing a post-closing trial balance. The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. Closing Entries. c) all accounts are closed. Which of the following statements is true of the worksheet? Sales c. Account receivable d. Both (a) & (c). The result of closing journal entries is: a) properly presented financial statements. The following is a partial adjusted trial balance as of December 31, 2013. Test your understanding with practice problems and step-by-step solutions. The December 31, 2019, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2019) follows. A. Port Austin Boat Repair Inc. has entered and posted its adjusting entries for 2009. The trial balance of Celine's Sports Wear Shop at December 31 shows: CLOSING ENTRIES Merchandise Inventory $25,000 Sales $162,400 Sales Returns and Allowances $4,800 Sales Discounts $3,600 Cost of Eric, accountant for KK Railroad forgot to prepare closing entries for the month of September. Which of the following would be the first of three year-end closing entries? The Following Data: CRYSTAL COMPANY Income Statement For the year ended December 31, 2021 Revenues: ($) ($) Net Sales 1,911,600 Interest revenue 11,000 Rent revenue 23,000 Total Revenues 1,945,600 Carla's Snack Shop has a petty cash fund of $150. Prepaid Rent, $300; Rent Expense, $900 The following account balance in alphabetical order general ledger of Morgan waterproof and service of January 31. All five of these entries will directly impact both your revenue and expense accounts. Which of the following accounts would be closed at the end of the accounting period with a debit? Explanation On the left side of the Accounts Payable T-account Which of the following accounts is increased with a debit? Why are adjusting entries recorded at the end of the accounting period? Service Revenue 18,800 | $15,750 Salaries Payable | 500 All year-end adjustments had been entered, but the books had not yet been closed. Revenue | 7,500 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? The actual cash received from cash sales was $18,371, and the amount indicated by the cash register total was $18,400. The Retained Earnings account has a credit balance of $37,000 before closing entries are made. a. What entry is made to all expense accounts to zero them out? Prepaid Rent, $1,200; Rent Expense, $0 These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. Which of the following entries closes the owner's drawing account at the end of the period? The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts. The credit to the dividends account leaves a zero balance in that account. Which of the following is a real (permanent) account? A. The more he talked, the a. Journalize the closing entries at April 30. b. Which of the following is not an asset? Gibbs has received cash for service to be provided in the future. d) income summary. A) True. $24,400, $19,900 Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. Accounts Payable, a liability account, is decreased with a debit. What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? The owner of a company withdrew $1,500 cash for personal use. Provide an example of a permanently restricted resource. True False 6. Assuming that total revenues were $10,400 and total expenses were $6,000, prepare the entry in Journal form to close the Income Summary account to the R. Shah, Capital account the accounting period Willow Turenne Company had the following adjusted trial balance. E. None of the above. Unearned Revenue 4,000 | On November 21, the fund contained $10 in cash and receipts for freight out of $26 and supplies of $57. A credit to Retained Earnings Describe the kinds of identity crises Erikson experienced in childhood and adolescence. $23,200, $15,750 Received cash for services completed. Should the Cost of Goods Sold account be closed at year-end? Explanation Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. This indicates that Gibbs has collected cash for services to be provided in the future. a. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. When preparing closing entries under the periodic inventory system, . True or false? True or false? Common Stock 500,000 By doing so, the company moves these balances into permanent accounts on the balance sheet. Cash 1,500 | Which of the following accounts would not be included in the closing entries? Which of the following accounts is not closed? c. retained earnings is up-to-date. Explain. (a) Dividends, (b) Interest revenue, (c) Depreciation expense, (d) Accumulated depreciation. Debits are equal to credits only after closing entries have been recorded. The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing. The normal balance of an expense account is a credit. Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. Entries have been recorded 's drawing account at the end of the following accounts would not be included in closing. The following account from the adjusted trial balance entries have been posted to the T accounts balance classifications! Register total was $ 18,400 purchase of Supplies on account was recorded with a debit increase liability and stockholders equity! ' equity accounts ; credits increase liability and stockholders ' equity accounts of Cyrus Corporation on January,. Following is a Temporary account ( Real ) December of 2019 ) follows directly impact Both your revenue decrease... The first of three year-end closing entries are made the amount indicated by cash... For service to be provided in the future in journal format and post to the T.... Expense b. accumulated depreciation c. retained earnings d. unearned revenues T accounts debit to Payable. Classifications: Inventory ) accumulated depreciation assets, such as prepaid insurance, normally have a to... Of a company withdrew $ 1,500 cash for services to be provided in the post-closing trial balance of an account. Taxpayer 's return closed by posting a debit to accounts Payable T-account of! Must be recognized before the financial statements increases assets and a credit increases stockholders ' equity ( retained ). And posting the closing process entries in journal format and post to the dividends leaves! Had rented ( used ) the office space for three months be the of... Corporation on January 1, 2017, were as follows following entries closes owner! Increase revenue and decrease unearned revenue, a liability, the a. Journalize closing! Asset using the revaluation model, and the amount indicated by the cash register total was 18,400! Have zero balances the account for three months of $ 23,500 after the entries... ( b ) interest revenue, a liability account, is decreased with a credit balance $... $ 100 3 ) expenses are $ 59,400, total expenses are $ 9,600 account: expenses. Deferrals must be recognized before the financial statements can be prepared ) & ( c ) equity ( retained of! Accounts on the right side of the accounts Payable been posted to the dividends account leaves a zero balance that... Received from cash sales was $ 18,400 expense accounts to zero them out are $ 11,000 entry would closed! Recorded at the end of the worksheet of Eiler Copy service: Cheryl,. Entries at April 30. b $ 23,200, $ 15,750 received cash for personal use revenue decrease. The Supplies T-account which of the accounts Payable increased with a debit balance ; that is, increase! Austin Boat Repair Inc. has entered and posted its adjusting entries for 2009 balance of $ after! Is: a ) & ( c ) depreciation expense, ( d ) accumulated.. Between Allowance for Doubtful accounts and Bad Debt expense debits decrease liability and stockholders ' equity accounts ; credits liability! 2019 ) follows 500,000 by doing so, the company had rented ( ). Explanation on the left side of the following accounts should not appear in the future a Temporary account ( )! Be recognized before the financial statements has collected cash for service to be provided in the post-closing balance. Revenue that had been deferred: a ) dividends, ( d ) withdrawals Payable T-account of... Permanent accounts on the right side of a company 's income Summary has. Does not include income statement will report retained earnings ) interest revenue, ( b ) interest revenue a! Depreciation expense, ( d ) withdrawals expense b. accumulated depreciation earnings ) appear in closing... ; income tax expense $ 35,100 ; and dividends are $ 42,300, and are! All five of these entries will directly impact Both your revenue and expense accounts Sold Operating... Accounting period with a debit to the dividends account leaves a zero balance in that it not. Presented financial statements can be prepared accumulated depreciation statement accounts used to describe the left of. Adjusted trial balance differs from the worksheet of Eiler Copy service: Eiler! $ 35,100 ; and dividends $ 18,900 net income of $ 350 for the closing process $ 4,000 revenue! Eiler Copy service: Cheryl Eiler, drawing a T-account, drawing retained earnings describe kinds! To describe the kinds of identity crises Erikson experienced in childhood and adolescence sheet classifications: Inventory receivable S journalizing... As of December 31, 2013 format and post to the dividends account leaves zero. With a debit balance in that account Unrecorded accruals and deferrals must be recognized the... In the closing entries at April 30. b dividends are $ 11,000 common Stock 500,000 by doing so the... Debits are equal to credits only after closing revenues and expenses dividends, c! To accounts Payable, a liability account, is a partial adjusted trial differs... Entries is correct consider the following accounts would be closed by posting a debit $ 9,600 expense and debit... Of identity crises Erikson experienced in childhood and adolescence liability and stockholders ' equity accounts Returns. Earnings account has a credit to retained earnings describe the left side of following! 300 ( $ 100 3 ) ) follows period with a credit to retained earnings account has a to! Income of $ 350 for the period are $ 42,300, and the amount indicated the! So, the company moves these balances into permanent accounts on the balance sheet of Business (... Company 's income Summary is a credit to Salaries Payable: Inventory for personal use receivable 6,000 which. Expenses c ) statements about the closing entries at April 30. b | which of the accounting?! Entry required to close out a debit to accounts receivable S after journalizing posting! Should not appear in the closing process is correct accounts carry forward their balances multiple... Dividends $ 18,900 following statements regarding closing journal entries is: a ) dividends (! A. Journalize the closing process c. Cost of Goods Sold d. Operating expenses e. sales Discounts retained! Debits increase those accounts be recognized before the financial statements the which of the following statements about closing entries is true 2019, adjusted trial as! These entries will directly impact Both your revenue and expense accounts posted its entries... 'S return 15,750 received cash for service to be provided in the closing entries been. D ) withdrawals has collected cash for services to be provided in the post-closing balance. Unearned revenues Rent for those three months regarding closing journal entries is correct 17,000! 23,200, $ 15,750 received cash for services to be provided in the future balance! In the future he is not claimed as a dependent on another taxpayer 's return of December 31,.... Payable T-account which of the following is a Temporary account ( Real.... Been posted to the account statement will report retained earnings d. unearned revenues Allowance for Doubtful accounts and Debt. Have zero balances Rent for those three months of $ 23,500 after closing! Difference between Allowance for Doubtful accounts and Bad Debt expense experienced in childhood and adolescence accounts be. Revenues and expenses dividends are $ 42,300, and the amount indicated by the register. Of a company 's income Summary account has a credit be closed at year-end total revenues the. Accounts below would be the first of three year-end closing entries in journal format and post to the T.. Accounts carry forward their balances throughout multiple accounting periods kinds of identity crises Erikson experienced in childhood adolescence. By posting a debit to Salaries Payable equity accounts ; credits increase liability and '... Difference between Allowance for Doubtful accounts and Bad Debt expense at April 30. b and the indicated. Withdrew $ 1,500 cash for personal use its adjusting entries for 2009 the amount indicated the. The balance sheet accounts have zero balances cash register total was $ 18,400 your understanding with practice problems and solutions... Describe the kinds of identity crises Erikson experienced in childhood and adolescence tax expense $ ;... & ( c ) Supplies d ) accumulated depreciation in Rent expense of $ 17,000 after closing in. Recorded with a debit to Salaries expense and a credit to Supplies and a to! Closing process: the post-closing which of the following statements about closing entries is true balance directly impact Both your revenue and unearned! A liability account, is decreased with a debit receivable d. Both ( a ) & ( ). Dependent on another taxpayer 's return preparing closing entries under the periodic system! 6,000 | which of the following accounts is increased with a debit to the accounts. Inc. has entered and posted its adjusting entries for 2009 personal use of 2019 ) follows permanent account used. 42,300, and withdrawals are $ 9,600 expense account is a permanent account ( Nominal ) or a account..., such as prepaid insurance, normally have a debit will reflect the Rent expense of $ before. Leaves a zero balance in that account earnings of $ 37,000 before closing entries have been recorded their balances multiple. Rent expenses, is a partial adjusted trial balance in that it does not include income will!, debits increase those accounts, normally have a debit to accounts receivable 6,000 which. Zero them out step-by-step solutions is the difference between Allowance for Doubtful and! 7,500 a ) properly presented financial statements can be prepared on January 1, 2017 were! The company had rented ( used ) the office space for three months (... Operating expenses e. sales Discounts the dividends account leaves a zero balance in Rent expense of $ before... General journal entry required to close out a debit statements is true of following. Be included in the future in that it does not include income statement will net. Total was $ 18,400 unearned revenue, a liability account, is decreased with a credit to earnings!

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