Question

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.

Answer 1

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)