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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 605 prepare the following:

  1. 1. Closing entries for Balloons and Baubbles in a general journal.
  2. 2. A post-closing trial balance.

EXERCISE 15-5B

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1.

To determine

Prepare closing entries for Company B&B.

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 B&B.

DateAccount titles and ExplanationDebit ($)Credit ($)
December 31Sales472,626
Rent revenue3,960
Purchases Returns and Allowances1,260
Purchases Discounts1,620
Income Summary479,466
 (To record closing entry of revenue accounts)
 
 December 31Income Summary340,605
Sales Returns and Allowances15,030
Purchases112,500
Freight-In1,890
Wages Expense115,650
Advertising Expense11,700
Supplies Expense4,230
Phone Expense1,215
Utilities Expense7,200
Insurance Expense1,440
Depreciation Expense—Building11,250
     Depreciation Expense-Store equipment4,500
Rent expense54,000
 (To record closing entry of expense accounts)
 
 December 31Income Summary148,851
Person B, Capital148,851
 (To record closing entry of capital accounts)
 
 December 31Person B, Capital23,400
Person B, Drawing23,400
(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 $472,626.
  • Rent revenue is a component of stockholders’ equity, and it is decreased. Therefore, debit rent revenue account for $3,960.
  • Purchase returns and allowances is a contra cost account, and it is decreased. Therefore, debit purchase returns and allowances account for $1,260.
  • 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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