How many temporary accounts does Eagles Corp need to close? Answer numerically o
ID: 2329312 • Letter: H
Question
How many temporary accounts does Eagles Corp need to close? Answer numerically or spell the number (e.g., 1 or one).
TRIAL BALANCE FOR PROBLEMS 1-3 Presented below is an alphabetical list of 2017 pre-closing account balances of Eagles Corp, a merchandising company. Assume all accounts have normal balances Accounts Accounts Payable Accounts Receivable Accumulated Depreciation - Building:s Administrative and General Expenses Buildings Balance 2,000 4,500 7,000 4,625 36,500 10,000 12,500 1,750 2,000 500 Common Stock Depreciation Expense - Buildings Dividends (Common Stock) Interest Expense Prepaid Rent Retained Earnings, Beginning Balance for 2016 Sales Revenue Selling Expenses Unearned Revenue 1,000 16,500 126,500 45,500 2,125Explanation / Answer
Total temporary accounts = 6
Temporary accounts - Temporary accounts are those accounts that are closed at the end of the accounting period. Further, these accounts begins each accounting year with a zero balance. Temporary accounts includes all Income statement accounts (expenses, revenues, gains, losses)
1. Administrative expenses and General expenses = $4,625
2. Depreciation expenses - Bulidings = $1,750
3. Dividends (Common stock) = $2,000
Even though dividend is not an income statement account, it is still a temporary account because this account will be closed at the year end by sending the balance to retained earnings.
Journal entry relating to dividends:
4. Interest expenses = $500
5. Sales revenue = $126,500
6. Selling expenses = $45,500
Note - All accounts except dividend account are income statement accounts.
Date Account titles and Explanation Debit Credit Dividends (Common stock) a/c $2,000 Accounts payable a/c $2,000 [dividend declared] Year end Retained earnings a/c $2,000 Dividends (Common stock) a/c $2,000 [closing of dividend account]Related Questions
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