Question

1. Interior Designs, Inc.

   Income Statement

   For the Year Ended December 31, 20X7

   Professional fees revenue……………………..………....$95,500

      Operating expenses:                       

   Interest expense………………..…….$1,200

   Salaries expense……………………...28,000

   Insurance expense…………………..…4,800

   Rent expense…………………………11,500

   Depreciation expense………………....12,000

   Supplies expense………………….……7,000

   Utilities expense……………………… 7,700

      Total operating expenses…...........................…………………72,200

   Income before income taxes………………………..........……23,300

   Income tax expense………...…….....,,……………………….    6,600

   Net income……………………………..........………………….$16,700

   Select the closing entries for the above financial statement.

   		Dr Professional Fees Revenue    $95,500    Cr Income Summary $95,500 Dr Income Summary $78,800    Cr Interest Expense $ 1,200    Cr Salaries Expense    $28,000    Cr Insurance Expense $ 4,800    Cr Rent Expense $11,500    Cr Depreciation Expense    $12,000    Cr Supplies Expense $ 7,000    Cr Utilities Expense $ 7,700    Cr Income Tax Expense    $ 6,600 Dr Income Summary    $16,700 Cr Retained Earnings $16,700
   		Dr Income Summary    $95,500    Cr Professional Fees Revenue $95,500 Dr Interest Expense $ 1,200 Dr Salaries Expense    $28,000 Dr Insurance Expense $ 4,800 Dr Rent Expense $11,500 Dr Depreciation Expense    $12,000 Dr Supplies Expense $ 7,000 Dr Utilities Expense $ 7,700 Dr Income Tax Expense    $ 6,600    Cr Income Summary 78,800 Dr Income Summary    $16,700 Cr Retained Earnings $16,700

Answer 1

Date	General Journal	Debit	Credit
Dec-31	Professional Fees Revenue	$95,500
	Income Summary		$95,500
	( To close revenues)
Dec-31	Income Summary	$78,800
	Interest expense		$1,200
	Salary expense		$28,000
	Insurance expense		$4,800
	Rent expense		$11,500
	Depreciation expense		$12,000
	Supplies expense		$7,000
	Utilities expense		$7,700
	Income tax expense		$6,600
	( To close expenses)
Dec-31	Income Summary	$16,700
	Retained earnings		$16,700
	( To close income summary)

First option is correct.

Working:

Income Statement
Revenues:
Professional fees revenue	95,500
Total revenue	95,500
Expenses:
Interest expense	-1,200
Salary expense	-28,000
Insurance expense	-4,800
Rent expense	-11,500
Depreciation expense	-12,000
Supplies expense	-7,000
Utilities expense	-7,700
Income tax expense	-6,600
Total expenses	-78,800
Net Income	$16,700