Answer:
<u>Blueboy Cheese Corporation </u>
<u>Income Statement</u>
<u>December 31, 2021</u>
<u>Account Title Debits Credits </u>
Sales revenue 680,000
Less Cost of goods sold 408,000
Gross Profit 272,000
less
Salaries expense 108,800
Rent expense 18,000
Depreciation expense 53,000
Interest expense 3,900
Advertising expense 3,600
<u>Un adjusted Profit 84,700</u>
<u> </u><u>Adjusted Profit 82,900 </u>
<u>Blueboy Cheese Corporation </u>
<u>Balance Sheet</u>
<u>December 31, 2021</u>
<u>Account Title Debits Credits </u>
Cash 51,900
Accounts receivable 290,000
Inventory 43,000
Office equipment 308,000
Accounts payable 56,000
Notes payable (due in six months) 39,000
Common stock 400,000
Retained earnings 115,000 + 82,900= 197,900
<u> </u>
<u>Total $ 692,900 692,900</u>
<u />
Closing Entries
Dec 31 Sales Revenue $680,000 Dr
Income Summary $680,000 Cr
The first closing entry transfers credit balances in revenue ( and gain ) accounts to the income summary accounts.
Dec 31 Income Summary $ 187,300 Dr
Salaries expense 108,800 Cr
Rent expense 18,000 Cr
Depreciation expense 53,000 Cr
Interest expense 3,900 Cr
Advertising expense 3,600 Cr
The second closing entry transfers debit balances in expense ( and loss) to the income summary accounts.
Dec 31 Income Summary $ 82,900
Retained Earnings Accounts $ 82,900
The third entry transfers the balance of income summary account to the owner's capital account or retained earnings account.
