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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Closing Entries Lloyd Bookstore shows the following dividends, revenue, and expense account balances before closing:

Chapter 3, Problem 9E, Closing Entries Lloyd Bookstore shows the following dividends, revenue, and expense account balances

Required:

Prepare closing entries.

To determine

Prepare closing entries.

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 of L Bookstore.

DateAccount titles and ExplanationDebitCredit
December 31Sales revenue$2,200  
 Gain on sale of land$300  
       Income summary $2,500
 (To close revenue accounts)  
    
December 31Income summary$2,080  
       Cost of goods sold $1,350
       Salaries expense $300
       Utilities expense $130
       Miscellaneous expense $120
       Income tax expense $180
 (To close expense accounts)  
    
December 31Income summary$420  
      Retained earnings $420
 (To close income summary accounts)  
    
December 31Retained earnings$250  
      Dividends $250
 (To close dividend accounts)  

Table (1)

Working note:

(1)Calculate the value of retained earnings...

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