The income statement for the Flounder Golf Club Inc. for the month ended July 31 shows Service Revenue $19,150, Salaries and Wages Expense $9,160, Maintenance and Repairs Expense $3,200, and Income Tax Expense $1,280. The statement of retained earnings shows an opening balance for Retained Earnings of $20,570 and Dividends $1,770.
The income statement for the Flounder Golf Club Inc. for the month ended July 31 shows Service Revenue $19,150, Salaries and Wages Expense $9,160, Maintenance and Repairs Expense $3,200, and Income Tax Expense $1,280. The statement of retained earnings shows an opening balance for Retained Earnings of $20,570 and Dividends $1,770.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter21: Corporations: Taxes, Earnings, Distributions, And The Statement Of Retained Earnings
Section: Chapter Questions
Problem 2CE
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Question
Prepare closing entries. Please be sure to show how you got your answer.
Expert Solution
Step 1
For first entry, service revenue of $19,150 is given in question is to be transferred to income summary.
For second entry, all expense accounts are given in question and total of all expense accounts are transferred to income summary (i.e., $9,160+$3,200+$1,280 = $13,640)
For third entry, net income i.e., balance in income summary is transferred to retained earnings.
Net income = Revenue - Expenses = $19,150 - $13,640 = $5,510
For fourth entry, dividend of $1,770 is given in question is to be transferred to retained earnings.
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