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Plumlee Corporation has the following account balances at December 31, 2017.Debit CreditService Fees Earned.......... $92,500Interest Income.......... 2,200Salaries Expense.......... $41,800Advertising Expense.......... 4,300Depreciation Expense.......... 8,700Income Tax Expense.......... 9,900Retained Earnings.......... 42,700Prepare entries to close these accounts in journal entry form. Set up T-accounts for each of the ledger accounts and post the entries to them. After these entries are posted, what is the balance of the Retained Earnings account?

Question
Plumlee Corporation has the following account balances at December 31, 2017.
Debit Credit
Service Fees Earned.......... $92,500
Interest Income.......... 2,200
Salaries Expense.......... $41,800
Advertising Expense.......... 4,300
Depreciation Expense.......... 8,700
Income Tax Expense.......... 9,900
Retained Earnings.......... 42,700
Prepare entries to close these accounts in journal entry form. Set up T-accounts for each of the ledger accounts and post the entries to them. After these entries are posted, what is the balance of the Retained Earnings account?
check_circleAnswer
Step 1

Closing entries are passed in the end of the financial year to close all the temporary accounts by transferring their balances to income summary account.

Step 2

Closing entries in the books of Plumlee Corporation

Journal entry in the books of Plumlee Corporation
Date Particulars
Service Fee Earned A/c
Ref DebitCredit
Dr
92500
Interest Income A/c
To Income Summary A/c
2200
Dr
94700
(Being, Service revenue transferred to
income statement)
Income Summary A/c
To Salary Expenses A/c
To Advertising Expenses A/c
64700
Dr
41800
4300
To Depreciation Exp A/c
To Income Tax Exp A/c
8700
9900
(Being, all expenses transferred to
income statement)
Income Summary A/c
To Retained Earnings A/c
30000
Dr
30000
(Being, profit transferred to retained
earnings account)
help_outline

Image Transcriptionclose

Journal entry in the books of Plumlee Corporation Date Particulars Service Fee Earned A/c Ref DebitCredit Dr 92500 Interest Income A/c To Income Summary A/c 2200 Dr 94700 (Being, Service revenue transferred to income statement) Income Summary A/c To Salary Expenses A/c To Advertising Expenses A/c 64700 Dr 41800 4300 To Depreciation Exp A/c To Income Tax Exp A/c 8700 9900 (Being, all expenses transferred to income statement) Income Summary A/c To Retained Earnings A/c 30000 Dr 30000 (Being, profit transferred to retained earnings account)

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Step 3

Preparation of T...

Service Fee Account
Amount Particulars
Particulars
Income Summary
A/c
Amount
92500 Service Fee
92500
92500
92500
Interest Income Account
Amount Particulars
Particulars
Amount
Income Summary
2200 Interest Income
A/c
2200
2200
2200
Salary Expense Account
Amount Particulars
Particulars
Amount
Income Summary
41800 A/c
Expense
41800
41800
41S00
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Service Fee Account Amount Particulars Particulars Income Summary A/c Amount 92500 Service Fee 92500 92500 92500 Interest Income Account Amount Particulars Particulars Amount Income Summary 2200 Interest Income A/c 2200 2200 2200 Salary Expense Account Amount Particulars Particulars Amount Income Summary 41800 A/c Expense 41800 41800 41S00

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