Question

Crane has year-end account balances of Sales Revenue $795,635, Interest Revenue $14,740, Cost of Goods Sold $567,566, Administrative Expenses $205,540, Income Tax Expense $35,298, and Dividends $20,554. Prepare the year-end closing entries.

Answer 1

Answer:

Closing entries

Journal 1

Debit : Sales Revenue $795,635

Credit : Income Statement  $795,635

Journal 2

Debit : Interest Revenue $14,740

Credit : Income Statement $14,740

Journal 3

Debit : Income statement $567,566

Credit : Cost of Goods Sold $567,566

Journal 4

Debit : Income Statement $205,540

Credit : Administrative Expenses $205,540

Journal 5

Debit : Income statement $35,298

Credit : Income Tax Expense $35,298

Journal 6

Debit : Retained Earnings Statement $20,554

Credit : Dividends $20,554

Explanation :

To prepare closing entries, first identify the final statement to which the Account belong to. For example, the Sales Revenue belong to the Income Statement. Then close off the Account using the final statement identified as above.