Question

The income statement for the Larkspur, Inc. for the month ended July 31 shows Service Revenue $17,120, Salaries and Wages Expense $9,470, Maintenance and Repairs Expense $3,430, and Income Tax Expense $1,060. The statement of retained earnings shows an opening balance for Retained Earnings of $24,930 and Dividends $2,040.
Prepare closing journal entries.

Answer 1

Answer:

                      Larkspur, Inc.

                   Income Statement

           For the month ended July 31

Service revenue                                    $17,120

Salaries and wages expense              -$9,470

Maintenance and repairs expense     -$3,430

Income tax expense                             -$1,060

Net income                                             $3,160

Closing entries:

July 31, 202x, income summary closing entries

Dr Service revenue 17,120

    Cr Income summary 17,120

Dr Income summary 13,960

    Cr Salaries and wages expense 9,470

    Cr Maintenance and repairs expense 3,430

    Cr Income tax expense 1,060

Dr Income summary 3,160

    Cr Retained earnings 3,160

Dr Retained earnings 2,040

    Cr Dividends 2,040