Chapter 3, Problem 3.63AP

LO 5

(Learning Objective 5: Close the books, and evaluate retained earnings) The accounts of Valley Services, Inc., at January 31, 2018, are listed in alphabetical order.

Accounts payable.................	$14,000	Interest expense................	$400
Accounts receivable...............	5,000	Note payable, long term...	15,400
Accumulated depreciation, equipment.................	7,000	Other assets, long-term ....	14,400
		Prepaid Expenses...............	6,600
Advertising expense...............	10,800	Returned earnings,
Cash......................................	26,000	January 31, 2017.........	13,600
Common stock...............	4,500	Salary expense..............	26,300
Current portion of long-term note payable...............	1,000	Salary payable................	2,300
		Service revenue	96,000
Depreciation expense—equipment	2,100	Supplies........................	2,400
Dividends declared...............	15,000	Supplies expense...............	4,500
Equipment.............................	43,000	Unearned-service revenue...	2,700

Requirements

1. 1. Ail adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Valley’s closing entries at January 31, 2018.
2. 2. Set up a T-account for Retained Earnings and post to that account. Then calculate Valley’s net income for the year ended January 31, 2018. What is the ending balance of Retained Earnings?
3. 3. Did Retained Earnings increase or decrease during the year? What caused the increase or the decrease?