Chapter 13, Problem 1bDIE

(a)

To determine

Corporation: A corporation is form of the business organization having separate legal entity which is different from its owners. It is created by the law and can be dissolved by law only.

Closing Entries: Closing entries are those journal entries which are passed to transfer the balances of temporary accounts to the permanent accounts. These are passed at the end of the accounting period, to transfer the final balance.

Rules for closing entries:

• Debit the account: All temporary accounts with credit balances.
• Credit the account: All temporary accounts with debit balances.

To prepare: The closing entry for net income

(b)

To determine

To prepare: Partial balance sheet to show stockholders’ equity at the year end.