1. Prepare closing entries. 2. Compare final closing entry to net income. Explain why the dollar amounts are identical?
JE 1 PizzaPan Inc. sold 1 million shares of their common stock for $1/share (par value of the common stock is $.10)
JE 2 PizzaPan Inc. purchased $200,000 inventory from a culinary distributor. PizzaPan inc. had to pay at the point of purchase the full $200,000 (cash).
JE 3 PizzaPan Inc. purchased a delivery truck for $40,000 (cash).
JE 4 PizzaPan Inc. sold on account 10,000 pizza pans to Domino’s Corporation. They sold the pans for $5/each. The cost of each pan is $3 ($3/each).
JE 5 PizzaPan Inc. sold on account 5,000 pizza cutters to PizzaHut Corporation. They sold the pizza cutters for $8/each. The cost of each pizza cutter is $4 ($4/each).
JE 6 PizzaPan Inc. paid their employees as follows:
Sales staff => $12,000
Administrative staff => $16,000
JE 7 PizzaPan Inc. received $50,000 payment from Domino’s Corporation.
1. Prepare closing entries.
2. Compare final closing entry to net income. Explain why the dollar amounts are identical?
Net Income is the net which business has earned during the period after deducting all expenses.
Closing entries are those entries which are entered by transferring the revenues and expenses incurred during the period to the income statement.
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