Selected accounts for Nina\'s Salon are presented below. All June 30 postings ar

Question

Selected accounts for Nina's Salon are presented below. All June 30 postings are from closing entries. Salaries Expense Service Revenue 6/10 3,456 6/30 9,276 6/30 15,176 6/15 6,753 6/28 5,820 6/24 8,423 Nina Cole, Capital Supplies Expense 6/30 2,593 6/1 11,762 6/12 754 6/30 1,396 6/30 1,194 6/24 642 Bal. 10,363 Rent Expense Nina Cole, Drawing 6/1 3,310 6/30 3,310 6/13 1,319 6/30 2,593 6/25 1,274 Instructions (a) Prepare the closing entries that were made. (b) Post the closing entries to Income Summary.

Explanation / Answer

net income = $ 722,904 + depreciation = $55,608 +Amortization expense = $6951 (-) Gain on sale of equipment = ($9,268) ========================================= income from operations = $7,76,195 Changes in working Capital (-)Increase A/c Receivables = ($42,750) (-)Decrease in A/c Payables = ( $8,100 ) (-)Decrease in Inventory = ($33,000) (-) Salaries payable decrease = ($4,000 ) ============================================ Statement of Cash Flows from operating activities = $6,88,345 ============================================ Note : Utilities expense 25,487 is not considered as amortisation expense hence not added to net income.If it is considered as amortization then cashflows = $688,345 + 25,487 = $7,13,832

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