Question

n December 31, 2019, the ledger of Lopez Company contained the following account balances: Cash $ 66,000 Maria Lopez, Drawing $ 52,000 Accounts Receivable 5,800 Fees Income 107,500 Supplies 4,200 Depreciation Expense 5,500 Equipment 52,000 Salaries Expense 34,000 Accumulated Depreciation 5,000 Supplies Expense 6,000 Accounts Payable 6,000 Telephone Expense 5,200 Maria Lopez, Capital 121,500 Utilities Expense 9,300 Prepare the closing entries for the above transactions.

I need the journal entries

Answer 1

• Closing entries

Date	Accounts title	Debit	Credit
31-Dec	Fees Income	$107,500
	Income Summary		$107,500
	(to close revenues)
31-Dec	Income Summary	$60,000
	Depreciation expense		$5,500
	Salaries expense		$34,000
	Supplies expense		$6,000
	Telephone expense		$5,200
	Utilities expense		$9,300
	(to close expenses)
31-Dec	Income Summary	$47,500
	Maria Lopez, Capital		$47,500
	(to close Income Summary - Net Income)
31-Dec	Maria Lopez, Capital	$52,000
	Maria Lopez, Drawings		$52,000
	(to close owner's withdrawals)

General Concepts regarding Closing entries:

#1:Temporary accounts, like Revenue accounts, have normal CREDIT balances, and hence they are closed by DEBITING the account.

#2:Temporary accounts, like Expense accounts or Contra revenue accounts, have normal DEBIT balances, and hence they are closed by CREDITING the account.

#3: In case of Net Income, Income Summary account has a CREDIT balance, and in order to close the Income Summary account, we DEBIT the account, and Credit Retained earnings/Owner's Capital

#4: In case of Net Loss, Income Summary account has a DEBIT balance, and in order to close the Income Summary account, we CREDIT the account, and Debit Retained earnings/Owner's Capital

#5: Dividend accounts have normal DEBIT balance, and are closed by CREDITING them, and debiting Retained earnings account.

#6: Drawings or Withdrawal account have a normal DEBIT balance, and hence closed by CREDITING the account, and debiting Owner's Capital account.