On December 31, 2016, Ditka Inc. had Retained Earnings of $279,800 before its closing entries were...

On December 31, 2016, Ditka Inc. had Retained Earnings of $279,800 before its closing entries were prepared and posted. During 2016, the company had service revenue of $180,100 and interest revenue of $87,300. The company used supplies in the amount of $93,900, advertising expenses were $17,600, salaries and wages totaled $20,100, and income tax expense was calculated as $16,100. During the year, the company declared and paid dividends of $7,200.

Required:

a.	Prepare the closing entries dated December 31, 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

b.	Prepare T-account for the Retained Earnings account.

Expert Solution

Journal entries
S.no.	Accounts title and explanations	Debit $	Credit $
a.	Service revenue		1,80,100
	Interest revenue		87,300
	Retained earnings (Bal. Fig.)		1,19,700
	Supplies expense	93,900
	Advertising expense	17,600
	Salaries and wages expense	20,100
	Income tax expense	16,100
	(for closing revenue and expenses)

b.	Retained earnings		7,200
	Dividend account			7,200
	(for closing the dividend account)

ekkarill92 answered 3 years ago

What is the ending balance in Retained Earnings after the closing entries are completed?

The following accounts and balances are taken from Moore Company's adjusted trial balance:Accounts Payable$10,000Accounts Receivable3,000Accumulated Depreciation1,800Depreciation Expense1,600Dividends2,000Insurance Expense2,300Interest Revenue1,340Prepaid Insurance2,320Retained Earnings10,100Salary Expense25,100Service Revenue37,800What is the ending balance in Retained Earnings after the closing entries are completed?A) $8,140B) $10,140C) $18,240D) $39,140

Closing entries reset the balance in retained earnings to zero. (True or False)

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