Question

Accounting Question:

The Sky Blue Corporation has the following adjusted trial balance at December 31. Image and details here:http://prntscr.com/isps3z What you are seeing from the picture is the full closing journal entry for revenues, expenses, and dividends. My question is regarding the revenues/expenses part because that is where i have incorrect errors on. The dividends portion of the closing journal entry is fine, so no help is needed there. The specific requirements for the revenues/expenses are shown below: http://prntscr.com/ispsa4 I am not sure if this is a technical error because the numbers should be correct and the debits and credits equal each other. UPDATE: PLEASE DISREGARD THIS QUESTION. I HAVE SOLVED MY PROBLEM. Turns out, i included an additional "retained earninngs account" that was not needed. I went off the example from my class lecture, but i think the teacher included 2 "retained earnings" accounts to sort the revenue portion and the expenses portion, but the question was asking me to record the closing entry for rev. AND expenses, so i combine both. The single retained earnings is the difference between the revenues (excluding unearned) and expenses in the general journal Now that i think about it...the teacher did mention that the book would try to include 2 because they combine rev/exp. into a single closing journal entry but there is actually 3 and i guess the activity assignment we did in class was for that purpose

Answer 1

• All working forms part of the answer
• The closing entries to close revenue accounts and expenses account can be recorded as a single entry or as two journal entries.
• You have tried to close both revenue and expense accounts in a single journal entry. Hence, I m providing you the suggestion as to how to record that journal entry.
• Working

Sales revenue	45630
Rent Revenue	340
Total revenues (A)	$45970
Salaries & Wages Expense	22400
Depreciation expense	1700
Utilities Expense	4620
Insurance expense	1800
Rent Expense	6400
Income Tax expense	3300
Total Expenses (B)	$40220
Net Income (A - B)	$5750

• When closing entries are recorded, Revenue accounts are debited, Expenses accounts are credited.
• Since, there is a Net Income of $5750, Retained earnings will be credited by this amount.
• Journal Entries to close the accounts are---

Date	General Journal	Debit ($)	Credit ($)
Dec-31	Sales revenue	45630
	Rent Revenue	340
	Salaries & Wages Expense		22400
	Depreciation expense		1700
	Utilities Expense		4620
	Insurance expense		1800
	Rent Expense		6400
	Income Tax expense		3300
	Retained earnings		5750
	(to close revenue and expense accounts)
Dec-31	Retained earnings	340
	Dividends		340
	( to close dividends account)