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-Dominant- [34]
3 years ago
10

The following financial information was taken from the books of Zone Health Club, a small spa and fitness club: Account Balances

as of December 31, Year 2 Accounts receivable $ 12,450 Accounts payable 6,200 Salaries payable 3,150 Cash 36,750 Dividends 2,000 Operating expense 35,300 Prepaid rent 1,200 Rent expense 8,400 Retained Earnings 1/1/Year 2 41,250 Salaries expense 14,500 Service revenue 65,400 Supplies 650 Supplies expense 3,150 Common stock 7,000 Unearned revenue 6,400 Land 15,000 Required a. Prepare the journal entries necessary to close the temporary accounts at December 31, Year 2, for Zone Health Club. b. What is the balance in the Retained Earnings account after the closing entries are posted?
Business
1 answer:
marshall27 [118]3 years ago
3 0

Answer:

A. 1. Dr Service revenue65,400

Cr Retained Earnings 65,400

2. D Retained earnings61,350

Cr Operating expense35,300

Cr Rent expense8,400

Cr Salaries expense14,500

Cr Supplies expense3,150

3. Dr Retained earnings2,000

Cr Dividends2,000

B. $43,300

Explanation:

A. Preparation of the journal entries to close the temporary accounts

1. Dr Service revenue65,400

Cr Retained Earnings 65,400

2. D Retained earnings61,350

(35,300+8,400+14,500+3,150)

Cr Operating expense35,300

Cr Rent expense8,400

Cr Salaries expense14,500

Cr Supplies expense3,150

3. Dr Retained earnings2,000

Cr Dividends2,000

B. Calculation for the balance in the Retained Earnings account

Retained Earnings Balance

Beginning retained earnings$41,250

Add: Revenue65,400

Less: Expenses(61,350)

Less: Dividends(2,000)

Ending retained earnings$43,300

Therefore the balance in the Retained Earnings account will be $43,300

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<u>Solution and Explanation:</u>

The following formulas will be used in order to calculate the accounts receivable turnover ratio and in order to find out the number of days collect.

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<u>Days to collect</u> = 365 divided by Accounts receivable turnover ratio

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3 years ago
The economics profession thrives because:
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