Question

This is a partial adjusted trial balance of Pharoah Company. PHAROAH COMPANY Adjusted Trial Balance January 31, 2022 Debit Credit Supplies $760 Prepaid Insurance 1,620 Salaries and Wages Payable $1,080 Unearned Service Revenue 780 Supplies Expense 870 Insurance Expense 540 Salaries and Wages Expense 1,770 Service Revenue 4,350 Prepare the closing entries at January 31, 2022. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Answer and Explanation:

The closing entries are shown below:

1.  Service revenue $4,350

              To Income summary 4,350

(Being the closing of service revenue is recorded)

For recording this we debited the sales revenue as it has normal credit balance so to close it we debited it and credited the income summary

2. Income summary $3,180

        To Supplies Expense  $870

         To Insurance Expense $540

         To Salaries and Wages Expense $1,770

(Being the closing of all expenses is recorded)

For recording this we debited the income summary and credited all expenses as it has normal debit balance so to close it we credited it

3. Income summary $1,170                 ($4,350 - $3,180)

          To Retained earnings $1,170

(Being the net income or loss is closed)

Since the revenue is more than the expenses so it would leads to net income and for recording this we debited the income summary and credited the retained earning so that the closing of the net income is recorded