Question

After the accounts were adjusted at January 31, 2010, the end of the fiscal year, the following balances were taken from the ledger of Taylor Pool Service Company:Capital Stock $ 20,000Retained Earnings 115,000Dividends 5,000Fees Earned 116,400Wages Expense 29,000Rent Expense 43,000Supplies Expense 7,300Miscellaneous Expense 1,750Journalize the four entries required to close the accounts.

Answer 1

Answer:

fees earned 116,400 debit

       income summary         116,400 credit

--to close revenues account--

Income summary   81,050 debit

Wages Expense               29,000 credit

Rent Expense                   43,000 credit

Supplies Expense               7,300 credit

Miscellaneous Expense      1,750 credit

-- to close expenses accounts--

Income summary   5,000 debit

        Dividends              5,000 credit

-- to close dividends accounts--

Income summary   30,350 debit

        Dividends              30,500 credit

-- to close income summary account--

Explanation:

• on accounting we close the temporary accounts which are:
• revenues
• expenses
• dividends

To do so, we will use an auxiliary account called income summary.

Once we close this we calculate the blaance of income summary using a T-account:

income summary

debit        credit  

81,050   116,400

 5,000

Balance: 30.350‬

And close it as well against retained earnings