Question

On January 1, 2021, Red Flash Photography had the following balances: Cash, $12,000; Supplies, $8,000; Land, $60,000; Deferred Revenue, $5,000; Common Stock $50,000; and Retained Earnings, $25,000. During 2021, the company had the following transactions:

1.		February		15		Issue additional shares of common stock, $20,000.
2.		May		20		Provide services to customers for cash, $35,000, and on account, $30,000.
3.		August		31		Pay salaries to employees for work in 2021, $23,000.
4.		October		1		Purchase rental space for one year, $12,000.
5.		November		17		Purchase supplies on account, $22,000.
6.		December		30		Pay dividends, $2,000.

The following information is available on December 31, 2021:

1. Employees are owed an additional $4,000 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,000 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.

5. Prepare closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
  

• Record the entry to close the revenue accounts.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

• Record the entry to close the expense accounts.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

• Record the entry to close the dividends account.

Note: Enter debits before credits.

	Date General Journal Debit Credit December 31, 2021

Answer 1

Date	Account Titles and Explanation	Debit($)	Credit ($)
31/12/21	Service revenue ($35,000+$30,000+$5,000)	70000
	Income summary		70000
	(To close the revenues)
31/12/21	Income summary	$55,000
	Salaries expense ($23,000+$4,000)		27,000
	Rent expense ($12,000/12*3)		3000
	Supplies expense ($8,000+$22,000-$5,000)		$25,000
	(To close the expenses)
31/12/21	Income summary ($70,000-$55,000)	$15,000
	Retained earnings		$15,000
	(To close the income summary)
31/12/21	Retained earnings	2,000
	Dividends		2,000
	)To close the dividends)