Explanation Closing entries : The journal entries prepared to close the temporary accounts to Retained Earnings account are referred to as closing entries. The revenue, expense, and dividends accounts are referred to as temporary accounts because the information and figures in these accounts is held temporarily and consequently transferred to permanent account at the end of accounting year. Prepare the closing entries for revenue account. Date Accounts title and explanation Post Ref. Debit ($) Credit ($) December 31 Revenues (E-) 347,400 Retained Earnings (E+) 347,400 ( To record the closing entry for revenues account ) Table (1) In this closing entry, revenue account is closed by transferring the amount of revenue to the retained earnings account in order to bring the revenue account balance to zero. Hence, debit the service revenue account and credit retained earnings account. Prepare the closing entry for expense account: Date Accounts title and explanation Post Ref. Debit ($) Credit ($) December 31 Retained Earnings (E–) 318,800 Expenses (E+) 318,800 ( To close the expenses account ) Table (2) In this closing entry, expenses account is closed by transferring the amount of expenses to the retained earnings in order to bring the expenses account balance to zero...

Financial Accounting for Undergr. -Text Only (Instructor's)

3rd Edition

ISBN: 9781618531629

Author: WALLACE

Publisher: Cambridge Business Publishers

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Chapter 3, Problem 8BE

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Prepare the closing entries and compute the balance of retained earnings of Corporation C.

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Chapter 3, Problem 7BE

Chapter 3, Problem 9BE

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Financial Accounting for Undergr. -Text Only (Instructor's)

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