Question

Shown below is a trial balance for novelty toys, inc., on december 31, after adjusting entries: novelty toys, inc. trial balance december 31 cash $7,750 accounts receivable 6,375 office equipment 11,250 accumulated depreciation $ 3,000 accounts payable 3,875 capital stock 11,250 retained earnings -0- dividends 3,750 fees earned 22,750 salaries expense 8,000 advertising expense 1,625 depreciation expense 2,125 $40,875 $40,875 the entry to close salaries expense account will:

Answer 1

In order to close the salaries account you need to credit the account for what the balance is, and then debit retained earnings for the same amount. This will bring the salaries account to zero for the next account cycle and record the expense in retained earnings.

The entry will be a debit to Retained Earnings for $8,000 and a credit to Salaries Expense for $8,000.