Question

The company's adjusted trial balance as follows includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Owner, Capital, $63,500; Owner, Withdrawals, $2,000; Sales, $56,000; Sales Returns and Allowances, $3,000; Sales Discounts, $1,500; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances. Prepare closing entry.

Answer 1

Answer:

                                                   Dr.           Cr.

Sales,                                    $56,000

Income Summary                                  $56,000

                                                                         

                                                      Dr.          Cr.

Income Summary                     $52,500

Sales Returns and Allowances                $3,000

Sales Discounts,                                       $1,500

Depreciation Expense,                            $25,000

Salaries Expense,                                     $23,000

                                                                         

Explanation:

Cash, Equipment, Accumulated Depreciation, Accounts Payable, Owner Capital and Owner Withdrawals are all permanent accounts. These accounts will not close and do not need any closing entry.