Question

Prepare closing entries for the below, is my question.

Transactions for Blackberry Mountain Inc for the month of January is as follows:

1 Company issued common stock for $21,000 2a Supplies are purchased for $3,000.

2b Insurance is paid for 6 months beginning January 1: $5,400 (record as an asset)

2c Rent is paid for 3 months beginning in January: $4,500 (record as an asset)

3 Blackberry Mountain Inc borrows $45,000 from 1st State Bank at 12% annual interest.

6 An equipment is purchased for $22,500 cash. It will be used for 3 years and will be depreciated monthly using straight-line depreciation with no salvage value. A full month of depreciation will be charged in January.

9 Services are performed for customers on account. Invoices totaling $9,800 are mailed.

10 Services are performed for cash customers: $7,600.

15 Blackberry Mountain Inc borrows $16,000 from 2nd State Bank at 9% annual interest.

16 Wages for the first half of the month are paid on January 16: $4,200

20 The company receives $3,000 from a customer for an advance order for services to be provided in January and February.

25 Collections from customers on account (see January 9 transaction): $4,500.

30 A $3,100 utility bill for January arrived. It is due on February 15.

Additional information for the adjusting entries at January 31:

a. The company completed 60% of the deliveries for the customer that paid in advance on January 20th.

b. Interest is accrued for the two bank loans (assume a full month for the 1st State Bank loan and ½ month for the 2nd State Bank loan).

c. The last 2 weeks wages earned by employees are $4,200 and will be paid on February 3rd.

d. Record January depreciation.

e. Adjust the prepaid asset accounts as needed.

Answer 1

Account Titles	Debit	Credit
Service Revenue	$          19,200		=9800+7600+3000*60%
Income Summary		$          19,200
(To close revenue accounts)
Income Summary	$          15,035
Insurance Expense		$                900	=5400/6
Rent Expense		$             1,500	=4500/3
Wages Expense		$             8,400	=4200+4200
Interest Expense		$                510	=45000*12%*1/12+16000*9%*1/24
Depreciation Expense		$                625	=22500/36
Utilities Expense		$             3,100
(To close expense accounts)
Income Summary	$            4,165		=19200-15035
Retained Earnings		$             4,165

Adjustment for Supplies was not given, so supplies expense not provided.