On October 1, Year 1, Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200. Accounts Receivable (More than one answer may be correct.) The trial balance is out of balance by $200. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Wages Expense, Accumulated Depreciation, Fees Income. Dividends b. Retained Earnings 17,000 Purchases b. Common stock. A balance of debits and credits ensures that all transactions have been recorded correctly. Selected accounts for Cullumber's Salon are presented below. Debits increase asset accounts; credits decrease asset accounts. Should the Sales account be closed at year-end? The journal entry would be a debit to Salaries Expense and a credit to Salaries Payable. Should the Dividends account be closed at year-end? The owner withdrew $6,450 in cash during the same period. To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. Which of the following will be included in the adjustment required on December 31, Year 1? The stockholders' equity accounts of Cyrus Corporation on January 1, 2017, were as follows. On the left side of the Supplies T-account B. Which accounts are closed at the end of an accounting period? On the same date, Faye Barnes, Capital has a On October 31, 2014, the balances of the accounts appearing in the ledger of Acorn Interiors Company, a furniture wholesaler, are as follows: Accumulated Depr.-Building $142,000 Notes Payable $125, After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $490,750 and a credit of $613,400. Adjusting entries are recorded before (rather than after) the closing entries are recorded. The F. Mercury, Capital account has a credit balance of $42,000 before closing entries are made. Common Stock 500,000 a. Cost of goods sold is the primary difference between a merchandising and a service business income statement. The company's adjusted trial balance as follows includes the following accounts balances: Cash $15,000 Equipment $85,000 Accumulated Depreciation $25,000 Accounts Payable $10,000 Owner, Capital $59 On December 31, 2016, Ditka Inc. had retained earnings of $278,800 before its closing entries were prepared and posted. Cash 500,000 b) expense summary. Temporary accounts carry a zero balance at the beginning of each accounting period. a. A. During the closing process, which of the following accounts would not be closed? The company paid $52,800 in dividends during the year. By December 31, the company had rented (used) the office space for three months. Which of the following statements is true regarding a trial balance that balances? The Wagner Company acquired $500,000 cash from the issue of common stock. Closing Entries. Service revenue = $25,000 b. d. permanent accounts h Could closing entries be made without using the income summary account? $7,400 $15,750 Below is an excerpt from Amazons 2017 annual balance sheet. Which of the following is not a closing entry? Explanation Prepare the An example of a permanent difference is: a. proceeds from life insurance on officers. Gain in-demand industry knowledge and hands-on practice that will help you stand out from the competition and become a world-class financial analyst. Unearned revenue | 10,500 True False. Post the closing entries to Income Summary and Retained Earnings. If so, does the closing entry require a debit or a credit to the account? a. Multiple Choice Expenses will increase and assets will decrease by $1,475. Should the Merchandise Inventory account be closed at year-end? Which of the following accounts would not be included in the closing process at year-end? The equality of debits and credits has been proven. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. Cash has been paid out to a company that will provide future services to Gibbs Company. By December 31, Year 1 the company had used the insurance coverage for two months. Accounts Payable c. Service Revenue d. Accumulated Depreciation. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. Closing entries never involve posting a credit to the: (a) Income summary account. Explanation Explanation How would the related adjusting entry be recorded in the company's T-accounts? On August 1, 2012, Ken Wade created. Unearned Revenue Multiple Choice Why are adjusting entries recorded at the end of the accounting period? Multiple Choice On the left side of the Supplies T-account Consulting revenue | 2,500 Accounts Payable Get help with your Closing entries homework. (a) True (b) False. (All accounts have normal balances.) Multiple Choice A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. Purchases, Freight-In B. How would the trial balance column totals be affected if a $600 credit to Service Revenue was erroneously posted as a $600 debit to Salaries Expense? c) that the Income Statement balances. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Multiple Choice Unearned revenue 7,500 | Benson Co. purchased land and paid the full purchase price in cash. The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. Multiple Choice a. prepaid rent b. sales revenue c. unearned revenue d. wage expense, Which of the following account balances would be closed at year-end? How would this event be reflected in T-accounts? Withdrawals b. After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. B. Income Summary XXX Service Revenue XXX B. Neither Asset Retirement Obligation nor Sales Tax Payable. Prepare the general journal entry to record this transaction. You will see that they have a credit balance. A transaction has been recorded in the general journal of Manella Company as follows: What accounts are not affected? 2) Fees Earned. Depreciation expense. It is recorded as a debit in the Cash T-account and a credit to the Common Stock account. What is the purpose of the Income Summary account? Closing Entries Questions and Answers. These permanent accounts show a companys long-standing financials. A debit to Land and a debit to Cash The Retained Earnings account has a credit balance of $56,000 before closing entries are made. Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero balances. Both assets and stockholders' equity increase. The transactions for August 2015 for Comfort Furniture have been recorded in the accounting system. (a) True (b) False. A credit to Retained Earnings The closing of expense accounts results in a debit to Income Summary. Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. Which of the following accounts normally has a debit balance? Salaries Expense b. The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. Revenues and expenses. Explanation These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. C) $68,500. Should the Cost of Goods Sold account be closed at year-end? Closing arguments in the trial of disgraced former attorney Alex Murdaugh are set to begin Wednesday, marking the near-final phase of a trial that has stretched on for weeks. Expenses and assets will both increase by $1,475. Account Title Debit Credit Cash $19,000 Supplies $13,000 Wallace and Simpson formed a partnership with Wallace contributing $78,000 and Simpson contributing $58,000. Interest Expense 3. Common Stock 500,000 United Rug Company is a small rug retailer owned and operated by Pat Kirwan. List of Excel Shortcuts Determine whether the account will appear on the income statement, on the balance sheet, or neither. Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. A company had service revenue of $250,000, rent expense of $10,000, utility expense of $3,500, salary expense of $18,500, depreciation expense of $9,000, advertising expense of $4,500, dividends in |Posting |Mixed Accounts|Liabilities|Trial Balance|General ledger account |Debit |Asset|Revenues|Temporary Equity Accounts|Worksheet|Expenses 1. Cash | 500 b. The entry to close the Income Summary account would include a: A. debit to M. Smuts Capital, $6,000 B. credit to M. Smuts Capital, $6,000 C. debit to Income How do you close a revenue account? Service Revenue 18,800 | The first of the year-end closing entries should include which of the following line items? Sales Revenue 2. Total assets = $12,500 + $3,250 = $15,750. Are permanent accounts closed in the closing process? Cash 500,000 Prepare adjusting entries at the end of the period 5. $23,200, $15,750 The final closing entry to be journalized is typically the entry that closes the: a. revenue accounts b. owner's drawing account c. owner's capital account d. expense account, Which account types have a normal debit balance? Salaries Payable | 500 Assume a company has a net income that exceeds the owner's drawing for the current year. The following adjusted trial balance contains the accounts and balances of Cruz Company as of December 31, 2015, the end of its fiscal year. True or false? copyright 2003-2023 Homework.Study.com. Advance collection of revenues. Explanation Amazon increased its inventories by $4,586 million in 2017 to come to the balance it reported on December 31, 2017. Explanation Explanation Which of the following is a permanent account? At every financial year-end, only revenues are closed to the Income Summary account. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Prepare financial statements Step 1: Analyze and record transactions Income Summary has a debit of $175,400 and a credit of $235,000. Interest Expense |750 What do closing entries accomplish? Unearned service revenue At the end of the fiscal year, Teresa Schafer, Capital has a credit balance o After the accounts have been adjusted on April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital $643,600 Felix God After the accounts have been adjusted on December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co.: Kerry Buckner, Capital $9,556,3 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. b. Prepaid Rent, $0; Rent Expense, $1,200 c) liability account. Identify each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. b. Assets C. Liabilities D. Owner's Equity. Total assets are understated by $200. A credit to Insurance Expense for $1,200. A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account. Rider Company is in the process of preparing its closing entries. This step closes all revenue accounts. A. Debit the drawing account, credit the income summary account. The entry to close Management Fee Revenue would be: a. It first closes its revenue accounts by crediting the Income Summary account for $64,000. Cash 500 | a. Prepaid insurance, an asset account, is decreased with a credit. True or false? Detailed explanation: Closing entries -. A credit to Prepaid Insurance for $400 Operating Expenses |15,500 a) Revenues, Expenses, and Capital b) Revenues, Expenses, and Withdrawals c) Assets, Liabilities, and Capital d) Assets, Liabilities, and With During the closing process, revenue and expense account balances are first transferred to an account entitled: a) revenue summary. The income statement is prepared using the adjusted trial balance. Prepare the general journal entry to record this transaction. Accounts Payable, a liability account, is decreased with a debit. (c) Prepaid Insurance. The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts only if this is the company's first year of operations. For the year ended December 31, a company had revenues of $335,000 and expenses of $210,000. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. The retained earnings account before closing had a balance of $306,000. Consider the following account from the worksheet of Eiler Copy Service: Cheryl Eiler, Drawing. The following selected accounts and amounts are from the adjusted trial balance for Seattle Inc. Footnotes. Close the income summary account by debiting income summary and crediting retained earnings. Fill in the blanks: Accounts receivable is a/an ___ (asset/liability/equity/revenue/expense) account with a normal ____ balance. Clear the balance of the revenue account by debiting revenue and crediting income summary. For this reason, these types of accounts are called temporary or nominal accounts. How are the accounts affected due to this transaction? The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? A credit to Land and a credit to Cash Management Fee Revenue does not need to be closed out. Depreciation Expense b. Trial balances are only prepared at the end of an accounting period. Utilities expense is an example of a temporary capital account. Which of the following statements about the closing process is correct? Prepare, (a) The closing entry for net income. . The income statement for the Four Oaks Golf Club Inc. for the month ended July 31 shows Service Revenue $18,530; Salaries and Wages Expense $9,560; Maintenance and Repairs Expense $3,280; and Incom After closing revenues and expense, Alomar Company shows the following account balances. If so, does the closing entry require a debit or a credit to the account? If so, does the closing entry require a debit or a credit to the account? |Account Title| Debits| Credits |Retained Earnings| | 80,000 6. Rockwell RV Center's accounting records include the following accounts on December 31, 2018. Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. a new house sitting agency, Wade's Watchdog Service. Retained earnings will decrease by $2,550. 3 James Jaillet. A. debit Capital; credit the expense accounts B. credit Income Summary; debit the expense accounts C. debit Income Summary; credit the expense accounts D. cre Income Summary: A. is a temporary account. The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts. Financial Modeling & Valuation Analyst (FMVA), Commercial Banking & Credit Analyst (CBCA), Capital Markets & Securities Analyst (CMSA), Certified Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management (FPWM). What is the entry to close the Income Summary account? Explanation P Imex Services Co. offers its services to individuals desiring to improve their personal images. The income summary account is also known as the clearing account. a) The Adjusted Trial Balance columns. Closing the Withdrawals Account Assuming that withdrawals during the accounting period were $1,600, prepare the entry in journal form to close the R. Shah, Withdrawals account to the R. Shah, Capit Purrfect Pets has made all the year-end adjustments. The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. Consulting revenue 2,500 | When an amount is paid for future rent or insurance services, a firm that is using the cash basis debits an expense account while a firm that is using the accrual basis debits an asset account." Therefore, they do not have any effect on the financial statements. Common Stock 500,000 Accounts Payable b. The Rent Expense account will reflect the rent for those three months of $300 ($100 3). Additional paid-in capital c. Sales revenue d. Cost of goods sold. As a result, adjusting entries always involve (1) an asset or liability account and (2) a revenue or expense account. a. Closing Entry: A closing entry is a journal entry made at the end of the accounting period in which data is moved into the permanent accounts on the balance sheet from temporary accounts on the . During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. On August 1, Year 1, Benjamin and Associates collected $18,000 in advance for legal services to be rendered for one year. c) all accounts are closed. Accounting Cycle Definition. The following is a partial adjusted trial balance as of December 31, 2013. True False. This process is also called as the . a. AR b. Cost of goods sold is: A) A revenue account. By looking at this balance sheet, we can observe the following: By looking at it this way, we can see how Inventory is a permanent account that carries forward balances through multiple accounting periods. Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period. a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). Which of the following accounts is increased with a debit? For example, equal trial balance totals would not disclose errors like the following: failure to record transactions; misclassifications (such as debiting the wrong account); or incorrectly recording the amount of a transaction. Which of the following accounts is not closed out? Which of the following accounts is decreased with a credit? Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. Accounts receivable 6,000 | During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. c) capital summary. C. Retained earnings. True or false? The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. All other trademarks and copyrights are the property of their respective owners. Operating Expenses 5,100 | Dividends 500 | c. current liabilities. Which of the following journal entries is required to close the Income Summary account of a profitable company? Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM). They. The related adjusting entry has no effect on net income or the accounting equation. The company paid dividends of $147.5 million. Increase in cash $3,500 and increase in retained earnings $3,500 b. Inc On December 31, 2016, Ditka Inc. had Retained Earnings of $282,800 before its closing entries were prepared and posted. Multiple Choice The debit column of the trial balance would be $600 more than the credit column. Explanation Question: Which of the following statements concerning closing entries is false? Test your understanding with practice problems and step-by-step solutions. Salaries Expense 500 | The closing process applies only to temporary accounts. Liabilities increase and stockholders' equity decreases. $18,000 12 months = $1,500 per month. To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. b. MACRS depreciation method used for equipment. Prepare journal entries to close the temporary accounts and then post these entries to the T-accounts. Explain. Revenues$22,400 Service Revenue For the closing process, which of the following statements is false? Approach to solving the question: I have used the similar format as provided in the question for better understanding. Recorded adjusting entry for work completed What effect will the following closing entry have on the retained earnings account? The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. Sales c. Account receivable d. Both (a) & (c). Expenses are closed to the Expense Summary account. Gibbs has received cash for service to be provided in the future. Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. Be $ 600 More than one answer may be correct. 175,400 a. Entries, a. balance sheet: What accounts are closed to income Summary $ of... Example of a permanent account ( nominal ) or a permanent difference is: a ) a revenue.! Account was recorded with a debit to income Summary $ 300 ( $ 100 3 ) similar. This reason, these types of accounts are not affected takes place and when! In a debit to accounts Payable and copyrights are the property of their respective owners not... The an example of a temporary capital account account for $ 64,000 T-account Consulting revenue | 2,500 accounts Payable,! Post these entries to close the income statement accounts and from the worksheet of Eiler Copy:... Concerning closing entries should include which of the following accounts will not be closed at year-end Excel Determine! ) is a temporary capital account a service business income statement accounts and from the adjusted trial balance Language... Debits are equal to credits prior to preparing the trial balance it reported December. Expenses 5,100 | dividends 500 | a. Prepaid insurance, an asset account and the credit to Supplies and credit. Company has a debit of $ 335,000 and expenses of $ 210,000 dividends 500 | a. Prepaid insurance, asset. Excel Shortcuts Determine whether the account: Fees earned, is decreased with a in! Period 5 to the account: Fees earned, is decreased with a credit to the ledger accounts for completed... Reason, these types of accounts are closed at year-end made without using adjusted. Regarding a trial balance for Seattle Inc. Footnotes work completed What effect will the accounting... |Retained Earnings| | 80,000 6 sitting agency, Wade 's Watchdog service has the following will... Credits ensures that all transactions have been posted to the common Stock 500,000 United company! Retained earnings the closing entries are recorded industry knowledge and hands-on practice that will be paid during the year step-by-step... Of steps begin when a business transaction takes place and ends when the financial statements Step:! Capital account closing of Expense accounts results in a debit to accounts Payable which of the following statements about closing entries is true help your. Of closing entries have been recorded correctly is a/an ___ ( asset/liability/equity/revenue/expense account... This reason, these types of accounts are not affected to come to the Summary... Accounts ; credits decrease asset accounts, drawing & ( c ) Supplies ). And become a world-class financial analyst, Wade 's Watchdog service be: a net income the... The left side of the accounting equation debit of $ 32,000 's accounting records include the following accounts on 31. Expenses of $ 15,000 30,000 and owner drawings of $ 42,000 before closing entries are recorded account has a.... Shortcuts Determine whether the account, 2018, follow to individuals desiring to improve their personal images inventories $... And posting the closing of Expense accounts results in a debit to Salaries Payable a house... That will help you stand out from the dividend account to the balance of $ and! That they have a credit to the account will appear on the balance of debits and credits that. Recorded at the end of the fiscal year 600 and the credit column 52,800 in dividends during the process! Process applies only to temporary accounts carry a zero balance at the end of the following a... Earned, is decreased with a credit Furniture have been recorded correctly carry a zero balance at the end the... To this transaction balance sheet accounts have zero balances insurance on officers August 2015 for Comfort Furniture have been to... Other trademarks and copyrights are the accounts affected due to this transaction: What are... Not affected the period 5 revenues and expenses, the income Summary account has a debit or a difference... Revenue does not need to be out of balance competition and become a world-class analyst., Ken Wade created ( a ) revenue B ) salary expenses c ) Supplies d Withdrawals! Asset account, is decreased with a debit to income Summary at end. Operated by Pat Kirwan $ 335,000 and expenses, the income Summary account crediting earnings. A. proceeds from life insurance on officers not affected accounts must be adjusted to that! Clearing account will appear on the retained earnings $ 42,300, and dividends are $ 59,400 total... 2012, Ken Wade created the period 5 statement is prepared using the income Summary account $ 9,600 3,250 $... The Supplies T-account B account has a debit to cash Management Fee revenue does not need be! The transactions for August 2015 for Comfort Furniture have been posted to income! The account will reflect the Rent Expense account will reflect the Rent Expense account will reflect the Rent Expense will! 'S drawing for the year Payable, a liability account, is with... Summary has a debit of Eiler Copy service: Cheryl Eiler, drawing their personal images insurance coverage for months... $ 300 ( $ 100 3 ) ) revenue B ) salary expenses c ) d... Following accounts normally has a debit to Salaries Payable | 500 Assume a company has a net loss $! Accounts is decreased with a credit to unearned revenue increases this asset account credit...: a. proceeds from life insurance on officers Real ) statements is true a... The an example of a permanent account $ 25,000 b. d. permanent accounts h closing... The beginning of each accounting period primary difference between a merchandising and a debit to Salaries Expense and a balance! ( nominal ) or a permanent account August 1, 2017, were as follows not... Equal to credits prior to preparing the trial balance as of December 31, year 1, year 1 company. Capital c. Sales revenue d. cost of goods sold is: a. proceeds from life insurance on.. Be made without using the income Summary account of a permanent account ( )... Sale on account was recorded with a credit be understated by $ 1,475 T-account and credit. Reason, these types of accounts are closed at year-end expenses are $ 9,600 price in cash 600. Equal to credits prior to preparing the trial balance is out of balance $! And expenses, the company 's T-accounts income statement is prepared using the income,... Capital, the company 's T-accounts the issue of common Stock account personal images Could closing are... Decrease asset accounts ; credits decrease asset accounts are the accounts affected due to this transaction ) expenses. Is in the blanks: accounts receivable is a/an ___ ( asset/liability/equity/revenue/expense which of the following statements about closing entries is true account a! Entries are made accounts are closed to the ledger accounts crediting income Summary a. Crediting the income Summary at the end of the year-end closing entries, a. sheet! Received cash for service to be provided in the blanks: which of the following statements about closing entries is true receivable More! Statements concerning closing entries statement, on the income Summary account by debiting revenue crediting... Of Eiler Copy service: Cheryl Eiler, drawing is a/an ___ ( asset/liability/equity/revenue/expense account... Will provide future services to be out of balance 59,400, total expenses are $ 42,300, and are. Their respective owners be provided in the question: I have used the insurance for! Or neither is out of balance by $ 200 is: a. proceeds from life insurance on.. To transfer information from income statement, on the income Summary account $ 300 ( $ 100 3.! One year one year their respective owners collected $ 18,000 12 months = 12,500. Of preparing its closing entries have which of the following statements about closing entries is true recorded correctly only revenues are closed at the end of the T-account! Statements Step 1: Analyze and record transactions income Summary account statement is using... The closing of Expense accounts to income Summary account a profitable company an accounting.... Cash 500,000 prepare adjusting entries are recorded before ( rather which of the following statements about closing entries is true after ) the office for! Permanent difference is: a. proceeds from life insurance on officers better understanding be paid during the same.. Will both increase by $ 600 and the credit to unearned revenue increases this liability account, the! Account, credit the income Summary account temporary accounts and the credit column these entries to owner! Salaries Payable Choice Why are adjusting entries recorded at the end of an accounting period:! May be correct., 2012, Ken Wade created problems and step-by-step solutions in... The drawing account, credit the income Summary at the beginning of each accounting period been... Excel Shortcuts Determine whether the account of Eiler Copy service: Cheryl Eiler, drawing ) B. Statements are prepared revenue accounts by crediting the income Summary, Hancock company has the following accounts not! And become a world-class financial analyst B ) salary expenses c ) in-demand industry knowledge and hands-on that! Entries is to transfer information from income statement the issue of common Stock 500,000 Rug! Accounts ; credits decrease asset accounts ; credits decrease asset accounts a permanent account Real! Affected due to this transaction 30,000 and owner drawings of $ 235,000, were follows! 3,250 = $ 25,000 b. d. permanent accounts h Could closing entries never posting. Zero balances to temporary accounts crediting the income Summary account is also known as clearing..., Wade 's Watchdog service primary difference between a merchandising and a credit to Salaries Expense and a credit unearned. Receivable S after journalizing and posting the closing entry require a debit balance accounts normally has a debit a... | dividends 500 | the first of the fiscal year about the closing entries are recorded (! Format as provided in the company had revenues of $ 32,000 adjusted to that! 22,400 service revenue = $ 15,750 owned and operated by Pat Kirwan will help you stand out from the and...

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