Answer:
Cruz Company
1. Closing Journal Entries:
Debit Income Summary $29,043
Credit:
612 Depreciation expense
—Equipment $2,000
622 Salaries expense 21,746
637 Insurance expense 1,567
640 Rent expense 2,499
652 Supplies expense 1,231
To close expenses to Income Summary.
Debit 404 Services revenue $37,300
Credit Income Summary $37,300
To close Service Revenue to Income Summary.
Debit Statement of Retained Earnings $6,000
Credit Dividends $6,000
To close Dividends to Statement of Retained Earnings.
Debit Income Summary $8,157
Credit Statement of Retained Earnings $8,157
To close the Income Summary to the Statement of Retained Earnings
2. Cruz Company
Post-Closing Trial Balance as of December 31:
No. Account Title Debit Credit
101 Cash $ 18,000
126 Supplies 11,800
128 Prepaid insurance 2,000
167 Equipment 23,000
168 Accumulated depreciation
—Equipment $ 6,500
307 Common stock 8,443
318 Retained earnings 39,857
Totals $ 54,800 $ 54,800
Explanation:
a) Data and Calculations:
Cruz Company
Trial Balance as of December 31:
No. Account Title Debit Credit
101 Cash $ 18,000
126 Supplies 11,800
128 Prepaid insurance 2,000
167 Equipment 23,000
168 Accumulated depreciation
—Equipment $ 6,500
307 Common stock 8,443
318 Retained earnings 37,600
319 Dividends 6,000
404 Services revenue 37,300
612 Depreciation expense
—Equipment 2,000
622 Salaries expense 21,746
637 Insurance expense 1,567
640 Rent expense 2,499
652 Supplies expense 1,231
Totals $ 89,843 $ 89,843
b) Income Summary
Service Revenue $37,300
less Expenses 29,043
Net Income $8,257
c) Statement of Retained Earnings
Retained Earnings, beginning $37,600
Add net income 8,257
Less Dividends 6,000
Retained Earnings, ending $39,857
