Chapter 4, Problem 4.20E

(a)

To determine

Closing entries:

Closing entries are those journal entries, which are passed to transfer the final balances of temporary accounts, (all revenues account, all expenses account and dividend) to the income summary account. These are passed at the end of the accounting period to transfer the final balances of the temporary accounts. In other words, the closing entries transfer the net income, or net loss, and dividends to the retained earnings account.

Post-closing trial balance:

Once the closing entries are journalized, and posted by the company, then the next step is to prepare another trial balance known as post-closing trial balance. The post-closing trial balance contains a list of all the permanent accounts, and its balances.

To prepare: The closing entries of Company T.

(b)

To determine

The post-closing balance in retained earnings.