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Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of...

Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

Accounts Payable $ 602

Accounts Receivable 302

Accumulated Depreciation 902

Cash 302

Common Stock 202

Deferred Revenue 202

Depreciation Expense 302

Equipment 3,202

Income Tax Expense 302

Interest Revenue 102

Notes Payable (long-term) 202

Notes Payable (short-term) 502

Prepaid Rent 102

Rent Expense 402

Retained Earnings 1,502

Salaries and Wages Expense 2,202

Service Revenue 6,206

Supplies 502

Supplies Expense 202

Travel Expense 2,602

How do you prepare the closing entry required at September 30, 2018?

Solutions

Expert Solution

CLOSING ENTRIES--September 30, 2018:
Income summary $        6,012
Depreciation Expense $         302
Income Tax Expense $         302
Rent Expense $         402
Salaries and Wages Expense $     2,202
Supplies Expense $         202
Travel Expense $     2,602
[To close expense accounts]
Service Revenue $        6,206
Interest Revenue $            102
Income summary $     6,308
[To close revenue accounts]
Income summary [6308-6012] $            296
Retained earnings $         296
[To close income summary to retained earnings]
WORKSHEET:
TRIAL BALANCE
Debit Credit
Accounts Payable $         602
Accounts Receivable $            302
Accumulated Depreciation $         902
Cash $            302
Common Stock $         202
Deferred Revenue $         202
Depreciation Expense $            302
Equipment $        3,202
Income Tax Expense $            302
Interest Revenue $         102
Notes Payable (long-term) $         202
Notes Payable (short-term) $         502
Prepaid Rent $            102
Rent Expense $            402
Retained Earnings $     1,502
Salaries and Wages Expense $        2,202
Service Revenue $     6,206
Supplies $            502
Supplies Expense $            202
Travel Expense $        2,602
Total $      10,422 $   10,422

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