Question

Timber Creek prepared the following adjusted trial balance on December 31, 20X3. The company has completed preparation of financial statements and is now ready to prepare closing entries.
	TIMBER CREEK
	Adjusted Trial Balance
	As of December 31, 20X3
			Debits		Credits
		Cash	$            35,600		$                    -
		Accounts receivable	23,700		-
		Supplies	7,500		-
		Equipment	325,700		-
		Accumulated depreciation	-		40,400
		Accounts payable	-		34,800
		Loan payable	-		100,000
		Capital stock	-		80,000
		Retained earnings	-		70,000
		Dividends	20,000		-
		Revenues	-		478,400
		Rent expense	120,000		-
		Salaries expense	235,600		-
		Supplies expense	18,000		-
		Interest expense	7,400		-
		Depreciation expense	10,100		-
			$          803,600		$          803,600
(a)   Prepare the necessary closing entries.
(b)   Use T-accounts to determine the post-closing balances of the accounts.
(c)   Prepare the post-closing trial balance.

Answer 1

(a)   Prepare the necessary closing entries.

Date	Accounts	Debit	Credit
Dec. 31	revenue	478,400
	income summary		478,400
	To close revenues to Income Summary
Dec. 31	income summary	391,100
	rent expense		120,000
	salaries expense		235,600
	supplies expense		18,000
	interest expense		7,400
	depreciation expense		10,100
	To close expenses to Income Summary
Dec. 31	income summary	87,300
	retain earnings		87,300
	To close Income Summary to retained earnings
Dec. 31	retained earnings	20,000
	dividends		20,000
	To close dividends

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(b)   Use T-accounts to determine the post-closing balances of the accounts.

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(c)   Prepare the post-closing trial balance.

TIMBER CREEK
Post-Closing Trial Balance
As of December 31, 20X3
		Debits	Credits
	Cash	$           35,600	$                    -
	Accounts receivable	23,700	-
	Supplies	7,500	-
	Equipment	325,700	-
	Accumulated depreciation	-	40,400
	Accounts payable	-	34,800
	Loan payable	-	100,000
	Capital stock	-	80,000
	Retained earnings	-	137,300
		$          392,500	$          392,500