Question

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The following transactions pertain to Smith Training Company for Year 1:

Jan.	30		Established the business when it acquired $54,000 cash from the issue of common stock.
Feb.	1		Paid rent for office space for two years, $16,200 cash.
Apr.	10		Purchased $740 of supplies on account.
July	1		Received $27,500 cash in advance for services to be provided over the next year.
	20		Paid $555 of the accounts payable from April 10.
Aug.	15		Billed a customer $10,000 for services provided during August.
Sept.	15		Completed a job and received $3,000 cash for services rendered.
Oct.	1		Paid employee salaries of $33,500 cash.
	15		Received $9,300 cash from accounts receivable.
Nov.	16		Billed customers $36,500 for services rendered on account.
Dec.	1		Paid a dividend of $700 cash to the stockholders.
	31		Adjusted records to recognize the services provided on the contract of July 1.
	31		Recorded $2,150 of accrued salaries as of December 31.
	31		Recorded the rent expense for the year. (See February 1.)
	31		Physically counted supplies; $90 was on hand at the end of the period.

e. Record the entries to close the Year 1 temporary accounts to Retained Earnings in the general journal and post to the T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to the nearest whole dollar amount.)

Answer 1

Requirement e:

Closing entries:

Date	Account title and explanation	Debit	Credit
Dec.31	Service revenue	$77,000
	Salaries expense		$35,650
	Rent Expense		$7,425
	Supplies expense		$650
	Retained Earnings		$33,275
	[To close revenues and expenses accounts to retained earnings]
Dec.31	Retained Earnings	$700
	Dividends		$700
	[To close dividends]

T-Accounts:

Retained Earnings
Dec.31	$700	Beg.	$0
		Dec.31	$33,275
		End. Bal.	$32,575
Service revenue
Dec.31	$77,000	Bal.	$77,000
Salaries expense
Bal.	$35,650	Dec.31	$35,650
Rent Expense
Bal.	$7,425	Dec.31	$7,425
Supplies expense
Bal.	$650	Dec.31	$650
Dividends
Bal.	$33,275	Dec.31	$33,275

Please note that as per given revenues and expenses directly closed to 'Retained earnings'. Hence 'Income summary' account did not generated.

Calculations:

Service revenue:
Aug.15	$10,000
Sept.15	$3,000
Nov.16	$36,500
Dec.31 Accrued	$27,500	$77,000
Salaries expense:
Oct.1	$33,500
Dec.31 Accrued	$2,150	$35,650
Rent expense:
(16,200 x 11 months/24 months)		$7,425
Supplies expense :
[$740-$90]		$650
Dividend		$700