Question

In: Accounting

Morris Company had the following adjusted trial balance: Additional Resources Account Titles Debit Credit Cash $25,220...

Morris Company had the following adjusted trial balance:

Additional Resources

Account Titles Debit Credit
Cash

$25,220
Accounts Receivable

18,400
Supplies

8,680
Equipment

44,400
Accumulated Depreciation

$7,000
Accounts Payable

4,850
Deferred Rent Revenue

2,280
Capital Stock

41,570
Retained Earnings

21,900
Dividends

15,700
Commission Revenue

49,200
Rent Revenue

6,600
Depreciation Expense

5,700
Utilities Expense

9,900
Supplies Expense

5,400
Total

$133,400

$133,400

The president of Morris 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:

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)?

$
What is the balance in the Retained Earnings account?

$
What is the balance in the rent revenue account?

$

Solutions

Expert Solution

Before giving the answers of above mentioned questions we need to prepare Income Statement and Statement of Retained Earnings:-

Morris Company

Income Statement

Accounts Amount Amount
Revenues:-
Commission Revenue $49,200
Rent Revenue 6,600
Total Revenues $55,800
Less:- Expenses
Depreciation Expense $5,700
Utilities Expense 9,900
Supplies Expense 5,400
Total Expenses ($21,000)
Net Income $34,800

Morris Company

Statement of Retained Earnings

Accounts Amount
Retained Earnings $21,900
Add:- Net Income 34,800
56,700
Less:- Dividends (15,700)
Retained Earnings Ending $41,000

The amount transferred from Income Summary to Retained Earnings Accounts in the third closing entry was $34,800 (Net Income)

The Balance of Retained Earnings is $41,000.

The Balance in Rent Revenue Account is $6,600.

Preparing Closing Entries:-

Morris Company

General Journal

No. Accounts Title and Explanation Debit Credit
1. Commission Revenue $49,200
Rent Revenue $6,600
Income Summary $55,800
(To close Revenue Accounts)
2. Income Summary $21,000
Depreciation Expense $5,700
Utilities Expense $9,900
Supplies Expense $5,400
(To close Expenses Accounts)
3. Income Summary $34,800
Retained Earnings $34,800
(To close Income Summary)
4. Retained Earnings $15,700
Dividends $15,700
(To close Dividends Account)

ekkarill92 answered 3 years ago
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