Chapter 3 Accrual Basis of Accounting Debit Credit 102500 65

Chapter 3 Accrual Basis of Accounting Debit Credit $102,500 6,500 $49,800 ..4,300 9,500 9,900 Salaries expense.. Depreciation expense. . 80,000 57,700 17,000 Prepare journal entries to close the accounts directly to Retained Earnings. After these entries are posted, what is the ending balance in the Retained Earnings account? 7 E3-12B. Closing Entries Use the inform

Solution

A) Journal entries to close the account directly to retined earnings-

1.

Dr Services Revenue $102,500
Cr Income summary $102,500

2.

Dr Interest Revenue $6,500
Cr Income summary $6,500

3.
Dr Income summary
Cr Depreciation Expense-Equipment $9,500
Cr Salaries Expense $49,800
Cr Advertising Expense $4,300
Cr Income tax Expense $9,900

4.
Dr Income summary 35,500
Cr Retained earnings 35,500

Dr Retained earnings 17,000
Cr Dividends 17,000

B) Ending balance in the retained earnings account-

Retained Earnings= 76,200 (57,700 + 35,500 - 17,000)