Question

The adjusted trial balance shown below is for Gordon Real Estate at the end of its reporting period 30 June 2019.

	Debit $	Credit $
Cash at bank	11440
Accounts receivable	10340
Office supplies	770
Prepaid insurance	2750
Office equipment	15400
Accumulated depreciation—office equipment		5280
Accounts payable		3680
Salaries payable		1200
Rent revenue received in advance		750
Gordon, Capital		17820
Gordon, Drawings	650
Service revenue		38000
Rent revenue		12000
Salaries expense	19200
Office supplies expense	1700
Rent expense	14500
Insurance expense	1100
Depreciation expense—office equipment	880
	78730	78730

Required

a)     Prepare the required closing entries for Gordon Real Estate for the year ended 30 June 2019. Narrations are required.

b)    Prepare Gordon’s Capital account using the T-account provided below.   (Total 15 Marks)

  Gordon, Capital

Date	Explanation	Amount $	Date	Explanation	Amount $

Answer 1

Solution

Gordon Real Estate

1. Closing entries for the year ended June 30, 2019:

Gordon Real Estate
Closing Entries for the Year Ended June 30, 2019
Date	Account Titles and Explanation	Debit	Credit
30-Jun-19	Service Revenue	$38,000
	Rent Revenue	$12,000
	Income Summary		$50,000
	(To close service revenue and rent revenue accounts to income summary)
30-Jun-19	Income Summary	$37,380
	salaries Expense		$19,200
	Office Supplies Expense		$1,700
	Rent Expense		$14,500
	Insurance Expense		$1,100
	Depreciation Expense - Office Equipment		$880
	(To close all expenses account to income summary)
30-Jun-19	Income Summary	$12,620
	Gordon, Capital		$12,620
	(To close net income to income summary)
30-Jun-19	Gordon, Capital	$650
	Gordon, Drawings		$650
	(To close drawings account to owner's capital)

2. Gordon’s capital account using T-account:

Gordon, Capital
Debit					Credit
Date	Explanation	Amount	Date	Explanation	Amount
30-Jun-19	Gordon, Drawings	$650		Beg. Balance	$17,820
			30-Jun-19	Income Summary	$12,620
			30-Jun-19	Balance	$29,790