Closing Entries: Closing entries is the process of closing temporary accounts at the end of year. Closing entries are prepared after preparing the adjusted trial balance . In the process of closing entries following steps are follows in the form of journal entries: Closing all revenue accounts by debiting the revenue accounts and crediting Income Summary Account. Closing all expenses by debiting the Income Summary accounts and crediting all expenses accounts. Closing the net income by debiting the Income Summary accounts and crediting Capital or Retained earrings account. Closing the withdrawals accounts by debiting the Capital or Retained earrings account and crediting the withdrawal account. To Calculate: The Changes in retained earnings .

Question

Want to see the full answer?

Answer 1

Question

Chapter 3, Problem 78.2C

To determine

Concept Introduction:

Closing Entries: Closing entries is the process of closing temporary accounts at the end of year. Closing entries are prepared after preparing the adjusted trial balance. In the process of closing entries following steps are follows in the form of journal entries:

Closing all revenue accounts by debiting the revenue accounts and crediting Income Summary Account.

Closing all expenses by debiting the Income Summary accounts and crediting all expenses accounts.

Closing the net income by debiting the Income Summary accounts and crediting Capital or Retained earrings account.

Closing the withdrawals accounts by debiting the Capital or Retained earrings account and crediting the withdrawal account.

To Calculate:

The Changes in retained earnings.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Selected accounts from Lue Co.’s adjusted trial balance for the year ended December 31 follow. Prepare aclassified balance sheet. Total equity. . . . . . . . . . . . . . . . . . . . . . . . . . . $30,000 Employee federal income taxes payable . . . . . . . . $9,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Federal unemployment taxes payable . . . . . . . . . . 200Salaries payable . . . . . . . . . . . . . . . . . . . . . . 34,000 FICA—Medicare taxes payable . . . . . . . . . . . . . . . . 725Accounts receivable . . . . . . . . . . . . . . . . . . . 5,100 FICA—Social Security taxes payable . . . . . . . . . . . . 3,100Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Employee medical insurance payable . . . . . . . . . . 2,000Current portion of long-term debt . . . . . . . . 4,000 State unemployment taxes payable . . . . . . . . . . . . 1,800Notes payable (due in 6 years) . . . . . . . . . . . 10,000 Sales tax payable (due in 2 weeks)…

Changes in various accounts and gains and losses on the sale of assets during the year for Argon Companyare given below:Item AmountAccounts receivable ............................... $90,000 decreaseAccrued interest receivable ................... $4,000 increaseInventory ................................................ $120,000 increasePrepaid expenses .................................. $3,000 decreaseAccounts payable ................................... $65,000 decreaseAccrued liabilities ................................... $8,000 increaseDeferred income taxes payable ............. $12,000 increaseSale of equipment .................................. $7,000 gainSale of long-term investments ............... $10,000 lossRequired:Prepare an answer sheet using the following column headings:Item Amount Add DeductFor each item, place an X in the Add or Deduct column to indicate whether the dollar amount should beadded to or deducted from net income under the indirect method when computing the…

The following nominal accounts apply to a primary beneficiary company and a VIE: Primary Company VIE Company Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(800,000) (240,000) Service fees . . . . . . . . . . . . . . . . . . . . . . . (150,000) Interest revenue . . . . . . . . . . . . . . . . . . . (90,000) Interest expense. . . . . . . . . . . . . . . . . . . . 50,000 Operating expenses . . . . . . . . . . . . . . . 550,000 230,000 Depreciation expense . . . . . . . . . . . . . 100,000 40,000 The fair value of the VIE assets had a fair value $100,000 higher than book value on the date control was achieved. The asset adjusted had a 5 year life. The VIE agrees to distribute a share of its income to the primary beneficiary equal to 10% of sales revenue and service fees. Prepare income distribution…