Question

Ross Company had the following adjusted trial balance:

Additional Resources

	Account Titles		Debit			Credit
	Cash		$25,580
	Accounts Receivable		18,500
	Supplies		9,800
	Equipment		35,100
	Accumulated Depreciation					$9,800
	Accounts Payable					4,530
	Deferred Rent Revenue					1,540
	Capital Stock					21,510
	Retained Earnings					22,400
	Dividends		13,600
	Commission Revenue					56,800
	Rent Revenue					5,500
	Depreciation Expense		5,900
	Utilities Expense		8,500
	Supplies Expense		5,100
	Total		$122,080			$122,080

The president of Ross Company has asked you to close the books (prepare and process the closing entries).

Required:

After the closing process has been completed, answer the following questions:

What is the balance in the Retained Earnings account? $ What is the balance in the utilities expense account? $ During the closing process, what amount was transferred from the income summary account to the Retained Earnings account in the third closing entry (i.e., after revenue and expense accounts have been closed to Income Summary)? $

Answer 1

1] Retained earnings balance = Begining retained earnings+Net income for the year-dividends

Net income

Commission Revenue	$56,800
Rent Revenue	$5,500
Total revenue		$62,300
Depreciation Expense	5,900
Utilities Expense	8,500
Supplies Expense	5,100
Total expenses		$19,500
Net income		$42,800[$62,300-19,500]

Retained earnings ending balance

Begining retained earnings+Net income for the year-dividends

$22,400+$42,800-$13,600

=$51,600

2] utilities expense =$0

After closing process has been completed , utilities expense shall be closed to income summary account so the balance of utilities expense would be $0

3] first revenue and expense account are closed to income summary

then income summary is closed to retaiend earnings account

	Account	debit	Credit
1	Commission revenue	$56,800
	Rent revenue	$5,500
	Income summary		$62,300
	[ to close revenues to income summary]
2	Income summary	$19,500
	depreciation expense		$5,900
	utilities expense		$8,500
	supplies expense		$5,100
	[ To close expense to income summary]
3	Income summary [$62,300-19,500]	$42,800
	Retained earnings		$42,800
	[ To close income summary to retained earnings]

During the closing process, what amount was transferred from the income summary account to the Retained Earnings account in the third closing entry :- $42,800

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