Question

Presented below is income statement and dividend information of the Nebraska Corporation for the year ended December 31, 2021. Sales revenue $ 620,000 Cost of goods sold $ 355,000 Salaries expense 90,000 Insurance expense 20,000 Dividend revenue 3,000 Depreciation expense 18,000 Miscellaneous expense 12,000 Administrative expense 35,000 Loss on sale of investments 8,000 Rent expense 10,000 Dividends 5,000 Required: Prepare the necessary closing entries at December 31, 2021.

Answer 1

Answer and Explanation:

The closing entries are shown below:

Sales revenue     $620,000  

Dividend revenue $3,000  

        To Income summary  $623000

(Being closing of revenues to Income Summary)  

Income summary 548000  

        To Salaries expenses $90,000

        To Miscellaneous expenses $12,000

        To Loss on sale of investment $8,000

        To Cost of goods sold $355,000

        To Insurance expenses $20,000

        To Depreciation expenses $18,000

        To Income tax expenses $35,000

        To Rent expenses $10,000

(Being  closing of  expenses to Income Summary)  

Income summary $75,000  

         To Retained earnings $75,000

(To close net income to Retained earnings)

Retained earnings Dr $5,000

            To Dividend $5,000

(Being closing of dividend is recorded)