Closing entries with net income Chart of Accounts Journal Final Question Instruc
ID: 2335954 • Letter: C
Question
Closing entries with net income Chart of Accounts Journal Final Question Instructions After all revenue and expense accounts have been closed at the end of the fiscalyear, Income Summary has a debit of $744,400 and a credit of $943,300. At the same date Retained Earnings has a credit balance of $1,447,000, and Dividends has a balance of $26,00 Required: A. Jourmalize the entries required to compiete the closing of the accounts on December 31. Refer to the Chart of Accounts for exact wording of account tities B. Determine the amount of Retained Earnings at the end of the period.Explanation / Answer
Closing Entries
Accounts and Explanations
Debit
Credit
Income Summery
$ 198,900.00*
Retained earnings
$ 198,900.00
(Transferred Income summary balance to retained earnings)
Retained earnings
$ 26,000.00
Dividends
$ 26,000.00
(Dividends account closed and transferred to retained earnings)
*Total credits minus total debits = ($943300-744400)
Closing entries includes transferring balance of Income summery to Retained earnings and dividends to retained earnings. Income summery increases balance of Retained earnings whereas Dividends reduces balance of Retained earnings.
Balance of Retained Earnings at the end of the year
Retained earnings Statement
Beginning balance
$ 1,447,000.00
Add: Income During the year
$ 198,900.00
Less: Dividends during the year
$ (26,000.00)
Ending balance
$ 1,619,900.00
Balance of Retained earnings at the end of the period = $ 1,619,900
Closing Entries
Accounts and Explanations
Debit
Credit
Income Summery
$ 198,900.00*
Retained earnings
$ 198,900.00
(Transferred Income summary balance to retained earnings)
Retained earnings
$ 26,000.00
Dividends
$ 26,000.00
(Dividends account closed and transferred to retained earnings)
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