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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

CLOSING ENTRIES Using the spreadsheet and partially completed Income Summary Account on page 598, prepare the following:

  1. 1. Closing entries for Gimbel’s Gifts and Gadgets in a general journal.
  2. 2. A post-closing trial balance.

EXERCISE 15-5A

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1.

To determine

Prepare closing entries for Company GGG.

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 closing entries for Company GGG.

DateAccount titles and ExplanationDebit ($)Credit ($)
December 31Sales420,112
Rent revenue3,520
Purchases Returns and Allowances1,120
Purchases Discounts1,440
Income Summary422,672
 (To record closing entry of revenue accounts)
 
 December 31Income Summary302,760
Sales Returns and Allowances13,360
Purchases100,000
Freight-In1,680
Wages Expense102,800
Advertising Expense10,400
Supplies Expense3,760
Phone Expense1,080
Utilities Expense6,400
Insurance Expense1,280
Depreciation Expense—Building10,000
     Depreciation Expense-Store equipment4,000
Rent expense48,000
 (To record closing entry of expense accounts)
 
 December 31Income Summary132,312
Person G, Capital132,312
 (To record closing entry of capital accounts)
 
 December 31Person G, Capital20,800
Person G, Drawing20,800
(To record closing entry of drawings accounts)

Table (1)

Closing entries for revenue accounts:

  • Sales are a component of stockholders’ equity, and it is decreased. Therefore, debit sales account for $420,112.
  • Rent revenue is a component of stockholders’ equity, and it is decreased. Therefore, debit rent revenue account for $3,520.
  • Purchase returns and allowances is a contra cost account, and it is decreased. Therefore, debit purchase returns and allowances account for $1,120.
  • Purchase discount is a contra cost account, and it is decreased...

2.

To determine

Prepare post-closing trail balance account for Company GGG.

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