Question

The adjusted trial balance columns of the worksheet for Martinez Company are as follows.

Martinez Company Worksheet (Partial) For the Month Ended April 30, 2022
		Adjusted Trial Balance
Account Titles		Dr.		Cr.
Cash		11,500
Accounts Receivable		7,720
Prepaid Rent		2,340
Equipment		22,700
Accumulated Depreciation—Equip.				4,500
Notes Payable				5,900
Accounts Payable				5,500
Common Stock				21,010
Retained Earnings				8,200
Dividends		3,850
Service Revenue				15,000
Salaries and Wages Expense		10,600
Rent Expense		750
Depreciation Expense		650
Interest Expense		80
Interest Payable				80
Totals		60,190		60,190

(a)

Journalize the closing entries at April 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
(1)	Apr. 30	enter an account title to close revenue account on April 30	enter a debit amount	enter a credit amount
		enter an account title to close revenue account on April 30	enter a debit amount	enter a credit amount
		(To close revenue account)
(2)	Apr. 30	enter an account title to close expense accounts on April 30	enter a debit amount	enter a credit amount
		enter an account title to close expense accounts on April 30	enter a debit amount	enter a credit amount
		enter an account title to close expense accounts on April 30	enter a debit amount	enter a credit amount
		enter an account title to close expense accounts on April 30	enter a debit amount	enter a credit amount
		enter an account title to close expense accounts on April 30	enter a debit amount	enter a credit amount
		(To close expense accounts)
(3)	Apr. 30	enter an account title to close net income or loss on April 30	enter a debit amount	enter a credit amount
		enter an account title to close net income or loss on April 30	enter a debit amount	enter a credit amount
		(To close net income / (loss))
(4)	Apr. 30	enter an account title to close dividends on April 30	enter a debit amount	enter a credit amount
		enter an account title to close dividends on April 30	enter a debit amount	enter a credit amount
		(To close dividends)

Answer 1

Accounting Cycles - Closing entries

This are Following temporary accounts

R- Revenue

E- Expenses

D- Dividend

The four basic steps in the closing Entries are:

• Step 1) Closure of the revenue A/c— The credit balances of the revenue accounts shall be transfered to a clearing account called Income Summary.
• Step 2) Closure of the expense A/c— The debit balances of  the expense accounts shall be trasnfered to a clearing account called Income Summary.
• Step 3) Closurethe Income Summary A/c— The balance of the Income Summary account shall transfered to the Retained Earnings account.
• Step 4) Closure the Dividends A/c— The debit balance of the Dividends account shall be transfered to the Retained Earnings account.

(For simplification firstly we have to prepare Profit and Loss or Revenue Statements)

Profit and Loss or Revenue Statements

Particulars	Amount in $
Revenues
Service Revenue	15,000
Total Revenue (A)	15,000
Expenses
Salaries and Wages Expense	10,600
Rent Expense	750
Depreciation Building	650
Interest Expense	80
Total Expenses(B)	12,080
Net Income (A)-(B)	2,920

(Student Notes - Now we are going to prepare Journal Entries)

Journal Entries

Date	Account and Explanation	Dr	Cr
Apr-30	Revenue A/c	$15,000
	Income Summary A/c		$15,000
	(To close revenue account)
Apr-30	Income Summary A/c	$12,080
	Salaries and Wages Expense		$10,600
	Rent Expense		$750
	Depreciation Building		$650
	Interest Expense		$80
	(To close expense accounts)
Apr-30	Income Summary A/c	$2,920
	Retained Earning A/c		$2,920
	(To close net income / (loss))
Apr-30	Retained Earning A/c	$3,850
	Dividend A/c		$3,850
	(To close dividends)