Question

IV. The following balances are stated below:

     Cash                                      $1,170

     Supplies                                  1,930

     Prepaid Insurance                   600

     Equipment                          20,600

     Accumulated depreciation 5,400

     Accounts Payable                    500

     Unearned Revenue                  700

     Capital                                 13,925

     Withdrawal                           4,800

      Revenue-Fees Earned       21,700               

      Salary Expense                    6,900

      Depreciation Expense         2,000

      Supplies Expense                   800

      Insurance Expense                400

     Using this information for questions 16-20 answer the

     following questions as they relate to closing entries

16. Which answer would best represent the closing entry for a

      revenue type account?

     a. debit to income summary for $22,400

     b. credit to income summary for $21,700

     c. credit to revenue for $21,700

     d. debit to income summary for $21,700

17. Which answer would represent the closing entry for

     expense type account?

      a. debit income summary for $10,100

      b. debit income summary for $15,500

      c. debit accumulated depreciation $5,400

      d. credit depreciation expense $2,000

                                        -5-

18. Which answer would represent the proper closing out of

       profit or loss for the period?

       a. debit income summary for $11,600

     b. debit capital for $11,600

       c. credit income summary for $12,300

       d. credit capital $12,300

19. Which answer would represent the proper entry for

       closing out the withdrawals?

       a. debit withdrawals for $4,800

       b. debit capital for $4,800

       c. credit income summary for $4,800

       d. none of the above are correct

20. After recording the proper closing entries what is the

      Capital account balance at the end of the period?

      a. $20,725

      b. $13,925

      c. $20,600

      d. $15,500

  

Answer 1

Q16.). Option (D) Debit to Income summary for $21,700 is correct.

Q17). Option (A) Debit income summary for $10,100 is correct..

Q18). Option (A) Debit income summary for $11,600 is correct.

Q19). Option(B) Debit capital for $4,800 is correct.

Q20). Option(A) $20,725 is correct.

*A closing entry: is a journal entry made at the end of an accounting period to transfer the temporary account balances to the permanent accounts. It makes all nominal accounts to be zero balances at the end of the accounting year.

Closing Journal Entry:

Sl.no	PARTICULARS	Debit	Credit
16	Revenue-Fees earned	$         21,700
	Income summary		$         21,700
	(To record the closing entry for revenue)
17	Income summary	$         10,100
	Salary expense		$            6,900
	Depreciation expense		$            2,000
	Supplies expense		$               800
	Insurance expense		$               400
	(To record the closing entry for expenses)
18	Income summary	$         11,600
	Capital		$         11,600
	(To record the closing entry for net profit)
19	Capital	$            4,800
	Withdrawal		$            4,800
	(To record the closing entry for withdrawal)
20	Capital in the beginning	$         13,925
	Add: Net Income	$            6,800
	Capital at the end:	$         20,725

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