Question

After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital $454,290 Felix Godwin, Drawing 25,000 Fees Earned 520,245 Wages Expense 398,500 Rent Expense 95,600 Supplies Expense 35,865 Miscellaneous Expense 11,955 Journalize the two entries required to close the accounts. For a compound transaction, if an amount box does not require an entry, leave it blank. Apr. 30 Felix Godwin, Capital 454,290 454,290 Felix Godwin, Drawing 25,000 Wages Expense 398,500 Fees Earned 520,245 520,245 Supplies Expense 35,865 Miscellaneous Expense 11,955 Apr. 30 Rent Payable 95,600 Felix Godwin, Capital 407,615

Answer 1

• While recording closing entries---

---Revenues accounts and other accounts having credit balances are DEBITED, and

---Expenses account and other accounts having debit balances are CREDITED.

---Difference is treated as Net Income or Net Loss and transferred to Capital account (or Retained Earnings).

---Drawings account, having debit balance, are closed by crediting them, and debiting Capital account.

• Closing Journal Entries

Date	General Journal	Debit	Credit
30-Apr	Fees Earned	$                              5,20,245.00
	Felix Godwin Capital	$                                 21,675.00 [balancing figure]
	Wages Expenses		$         3,98,500.00
	Rent Expenses		$             95,600.00
	Supplies Expenses		$             35,865.00
	Miscellaneous Expenses		$             11,955.00
	(revenue and expenses accounts closed)
30-Apr	Felix Godwin Capital	$                                 25,000.00
	Felix Godwin Drawings		$             25,000.00
	(drawings account closed)

• Working For Capital balance after closing:

Felix Godwin Balance before closing	$                              4,54,290.00	CREDIT
Effect of closing entry 1	$                               (21,675.00)	debited by
Effect of closing entry 2	$                               (25,000.00)	debited by
Felix Godwin Capital Balance after closing	$                              4,07,615.00	CREDIT