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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Closing Entries Lloyd Bookstore shows the following dividends, revenue, and expense account balances before closing:
Required:
Prepare closing entries.
Prepare closing entries.
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 of L Bookstore.
| Date | Account titles and Explanation | Debit | Credit |
| December 31 | Sales revenue | $2,200 | Â |
| Â | Gain on sale of land | $300 | Â |
| Â | Â Â Â Â Â Income summary | Â | $2,500 |
| Â | (To close revenue accounts) | Â | Â |
| Â | Â | Â | Â |
| December 31 | Income summary | $2,080 | Â |
| Â | Â Â Â Â Â Cost of goods sold | Â | $1,350 |
| Â | Â Â Â Â Â Salaries expense | Â | $300 |
| Â | Â Â Â Â Â Utilities expense | Â | $130 |
| Â | Â Â Â Â Â Miscellaneous expense | Â | $120 |
| Â | Â Â Â Â Â Income tax expense | Â | $180 |
| Â | (To close expense accounts) | Â | Â |
| Â | Â | Â | Â |
| December 31 | Income summary | $420 | Â |
| Â | Â Â Â Â Retained earnings | Â | $420 |
| Â | (To close income summary accounts) | Â | Â |
| Â | Â | Â | Â |
| December 31 | Retained earnings | $250 | Â |
| Â | Â Â Â Â Dividends | Â | $250 |
| Â | (To close dividend accounts) | Â | Â |
Table (1)
Working note:
(1)Calculate the value of retained earnings...
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