Question

Presented below are selected account balances for Blue Co. as of December 31, 2020. Inventory 12/31/20 $60,260 Cost of Goods Sold $223,793 Common Stock 73,760 Selling Expenses 15,746 Retained Earnings 45,260 Administrative Expenses 38,647 Dividends 17,810 Income Tax Expense 29,630 Sales Returns and Allowances 12,207 Sales Discounts 15,210 Sales Revenue 416,460 Prepare closing entries for Homer Winslow Co. on December 31, 2020.

Answer 1

Explanation:

The closing entries for the following accounts are given below:

1. Sales Revenue A/c Dr $416,460

                    To Income Summary $416,460

(Being revenue account closed)

2. Income summary A/c Dr $335,233

              To Sales Returns and Allowances A/c $12,207

              To Sales Discounts A/c $15,210

              To Cost of Goods Sol A/c $223,793

              To Selling Expenses A/c  $15,746

              To Administrative Expenses A/c $38,647

              To Income Tax Expense A/c $29,630

(Being expenses accounts are closed)

3. Income summary A/c Dr $81,227  ($416,460 - 335,233)

             To Retained earning $81,227

(Being the difference is credited to retained earning)

4. Retained earnings A/c Dr $17,810

                  To Dividend A/c $17,810

(Being dividend account is closed)