Question

In: Accounting

A company has the following adjusted trial balance: Account Debit Credit Cash $1100​ ​ Accounts Receivable...

A company has the following adjusted trial balance:

Account Debit Credit
Cash $1100​ ​
Accounts Receivable 900​ ​
Inventory 1800​ ​
Supplies 2000​ ​
Prepaid Rent 400​ ​
Land 6500​ ​
Building 39,800​ ​
Accumulated Depreciation—Building ​ $8000​
Accounts Payable ​ 7600​
Unearned Revenue ​ 4300​
Notes Payable, due 2020 ​ 2300​
Common Stock ​ 6400​
Retained Earnings ​ 2700​
Dividends 800​ ​
Service Revenue ​ 33,800​
Rent Expense 1300​ ​
Supplies Expense 1100​ ​
Salaries Expense 6200​ ​
Depreciation Expense—Building 1300​ ​
Utilities Expense 1900​
Totals $65,100 $65,100

Which closing entry is needed?

Question 26 options:

A)

 Debit Dividends for $800 and credit Retained Earnings for $800

B)

 Debit Rent Expense for $1300 and credit Retained Earnings for $1300

C)

 Credit Retained Earnings for $1900 and debit Cash for $1900

D)

 Debit Service Revenue for $33,800 and credit Retained Earnings for $33,800

Solutions

Expert Solution

  • When recording closing entries:
    >temporary accounts with debit balances are CREDITED
    >temporary accounts with credit balances are DEBITED.
    >Retained earnings are Debited and Credited respectively.
  • Correct Answer = Option ‘D’
    Debit Service Revenue for $33,800 and credit Retained Earnings for $33,800
    This is because Service revenue is a revenue account having a CREDIT balance which is closed by debiting the said account.

ekkarill92 answered 1 year ago
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