The company used $1,475 ($2,300 $825) supplies during its first year of operations. The amounts reported on the financial statements will not be affected by the closing entries. Following; main inventory accounting systems; 1 page. By December 31, Year 1 the company had used the insurance coverage for two months. How are the accounts affected due to this transaction? b. B. Multiple Choice Consulting revenue | 1,300 Determine whether the following account has a temporary balance: Dividends. a. net income b. income summary c. dividends d. assets. Why sales account would be debited at the end of the accounting period? What are the steps in the closing process? On the right side of the Supplies T-account Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. Total liabilities are overstated by $200. (b) Supplies. The following account balance in alphabetical order general ledger of Morgan waterproof and service of January 31. When closing the accounts in the income statement, accountants can choose to close them directly and transfer the values to the retained earnings account or transition them to the income summary account before finally transferring them to the retained earnings account. c) opening balance of t American Chip Corporation's fiscal year-end is December 31. 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? Retained Earnings 17,000 Describe the four entries that close the temporary accounts. O C. It involves preparation of adjusting entries after the closing entries. A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. Gibbs has received cash for service to be provided in the future. Closing entries are recorded after financial statements have been prepared. How are time tickets used in job order costing? Explanation The income summary account is also known as the clearing account. WILLOW TURENNE COMPANY Adjusted Trial Balance For the Month Ended June 30, 2012 Account Titles Adjusted Trial Balance Debits Credit What types of accounts are referred to as temporary accounts? A. What High Step Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. Purchases b. Retained Earnings | 4,500 Total assets are understated by $200. Identify whether the account: Fees earned, is a Temporary Account (Nominal) or a Permanent Account (Real). If so, does the closing entry require a debit or a credit to the account? If so, does the closing entry require a debit or a credit to the account? Service Revenue | 7,450 Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. Total revenues for the period are $74,200, total expenses are $49,300, and dividends are $16,600. As a result, adjusting entries always involve (1) an asset or liability account and (2) a revenue or expense account. Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. Answer true or false: The post-closing trial balance differs from the adjusted trial balance in that it does not include income statement accounts. Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? It is done by debiting various revenue accounts and crediting income summary account. Gibbs has completed services for which they had earlier received cash in advance. Revenue | 4,000 True or false? Rider Company is in the process of preparing its closing entries. a. Credit R A company had $80,000 of Sales revenue and $75,000 of Expenses. Stockholders' equity accounts, such as common stock, normally have a credit balance; that is, credits increase those accounts. E. None of the above. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Which of the following entries closes the owner's drawing account at the end of the period? Should the Sales Returns and Allowances account be closed at year-end? Increase in cash $3,500 and increase in retained earnings $3,500 b. Inc On December 31, 2016, Ditka Inc. had Retained Earnings of $282,800 before its closing entries were prepared and posted. What type of accounts get closed out? Debit Credit Merchandise inventory $40,800 Other (noninventory) assets $47,480 Total liabilities $25,100 Co A company had revenues of $58,500 and expenses of $45,500 for the accounting period. True or false? Identify at least three permanent and three temporary accounts a business would have and explain why each account is classified as such. Permanent accounts would not include: a. cost of goods sold. True or false? a. The following data were taken from the accounting records of Lorenzo Company. Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. Trial balances are only prepared at the end of an accounting period. The final closing entry to be journalized is typically the entry that closes the: a. revenue accounts b. owner's drawing account c. owner's capital account d. expense account, Which account types have a normal debit balance? Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. Which one of the following would not be included in a closing entry? What are the adjusted account balances at December 31, Year 1? Stevenson Company collected $5,350 from a customer on account. B) An asset account. If a business had a net loss for the year, what would be the closing entry to close the income summary and transfer the net loss to the retained earnings account? Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. To do this, their balances are emptied into the income summary account. Common stock. Account Title:Deb | Cred Explanation It ignores the beginning balances of accounts. A debit to Prepaid Insurance for $400 d. accumulated depreciation. The debit column of the trial balance would be $1,200 more than the credit column. Which of the following is not an asset? Prepaid Rent Presented is information related to Rogers Co. for the month of January 2010. Which of the following statements is true regarding a trial balance that balances? Liabilities increase and stockholders' equity decreases. True or false? A credit to Retained Earnings At the beginning of t What do the closing entries of a periodic system include? Which of the following accounts is not closed? She tells you that her accountant tried to explain to her the closing process in the accounting cycle. Why are adjusting entries recorded at the end of the accounting period? d. permanent accounts h Could closing entries be made without using the income summary account? Which of the accounts below would be closed by posting a debit to the account? A balance of debits and credits ensures that all transactions have been recorded correctly. At the end of the accounting year, we closed all the real accounts. The company would record an increase in cash (a debit) of $1,300, an increase in accounts receivable (a debit) of $1,200, and an increase in revenue (a credit) of $2,500. Accounts Receivable 3,250 | The partial worksheet for the Jamison Company showed the following data on October 31, 2019. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. Cash12,500 | Johnson, Inc. paid rent expense of $3,500 for the month of October. Which of the following is a true statement about closing the books of a corporation? (d) Depreciation expense account. To understand this better, we can look at an account such as inventory. Explanation Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. Multiple Choice Neither Asset Retirement Obligation nor Sales Tax Payable. Which of the following is a real (permanent) account? Retained earnings will increase by $2,550. Accounts receivable 6,000 | Borrowers total debits (charges) subtracted from the sellers total credits B. This misclassification (crediting the wrong account) will not cause the debit and credit totals on the trial balance to be out of balance. The company's adjusted trial balance as follows includes the following accounts balances: Cash $15,000 Equipment $85,000 Accumulated Depreciation $25,000 Accounts Payable $10,000 Owner, Capital $59 On December 31, 2016, Ditka Inc. had retained earnings of $278,800 before its closing entries were prepared and posted. Management Fee Revenue does not need to be closed out. What journal entry is used to close the Income Summary account? Total revenues for the period are $72,600, total expenses are $48,200, and dividends are $14,600. The worksheet for Adams Company shows the following in the financial statement columns. O D. It is a process by which financial statements for a period are produced. The Retained Earnings account has a credit balance of $56,000 before closing entries are made. copyright 2003-2023 Homework.Study.com. Revenue | 7,500 During the year, Croc had a net loss of $30,000 and owner drawings of $15,000. Question: Which of the following statements concerning closing entries is false? The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. A debit to Land and a credit to Cash. Explanation A credit to Land and a credit to Cash The closing of expense accounts results in a debit to Income Summary. The actual cash received from cash sales was $18,371, and the amount indicated by the cash register total was $18,400. Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). On October 1, Year 1, Senegal Company paid $1,200 in advance for rent of office space for one year and recorded a journal entry debiting Prepaid Rent and crediting Cash for $1,200. The income summary account is also known as the clearing account. Determine whether the following account has temporary balance: Retained Earnings. On the left side of the Supplies T-account Footnotes. Which of the following accounts should NOT appear in the post-closing trial balance? The company paid dividends of $147.5 million. 1. Salaries Payable 500 | Identify whether the account: Rent expenses, is a Temporary Account (Nominal) or a Permanent Account (Real). If so, does the closing entry require a debit or a credit to the account? Which of the following accounts is not closed out? b) expense summary. Accounts Payable Multiple Choice The adjusting entry decreases unearned revenue, a liability, and increases revenue. b) decrease in the merchandise inventory. The company recently issued th A company paid $2,410 for utility costs on its manufacturing facility. Revenue | 4,000 Which of the following accounts normally has a debit balance? Assets increase and stockholders' equity decreases. D. both A and C are correct. The employees of Able Company have worked the last two weeks of Year 1, but the employees' salaries have not been paid or recorded as of December 31, Year 1. The more he talked, the a. Journalize the closing entries at April 30. b. True False. Explain theoretically how the distinction between temporary and permanent accounts relates to the closing process. The Insurance Expense account must be increased with a debit for $400 ($200 2) and the Prepaid Insurance account must be decreased with a credit for the same amount. It then closes its expense accounts by de Mira Services Co. offers its services to individuals desiring to improve their personal images. On December 31, 2017, Amazon posted $16,047 million of inventory. This is done using the income summary account. True or false? Let us discuss how to do the latter. Rent Expense c. Sales d. Merchandise Inventory. Owner, capital. Operating Expenses |15,500 The transactions for August 2015 for Comfort Furniture have been recorded in the accounting system. Which of the following statements about the closing process is correct? Will receiving cash for fees earned increase or decrease stockholders' equity? Should the Sales account be closed at year-end? Explain how the following general journal entry affects the accounting equation. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. Prepaid insurance, an asset account, is decreased with a credit. A) Unearned Revenue B) Fees Earned C) Josh Morton, Drawing D) Rent Expense. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Which of the following accounts would be considered a temporary account? On December 31, 2007, Bert's Farm Store had the following account balances in its accounting system. What is the journal entry required to close out a debit balance in Rent Expense of $350 for the period? True or false? Incorrectly recording a cash sale as a sale on account would not cause the trial balance to be out of balance. Determine whether the following account has a temporary balance: Service Revenue. Which of the following entries reflect the end-of-the-year adjustment to reflect revenue earned? Goodwill b. The journal entry would be a debit to unearned revenue and a credit to revenue. Which of the following statements regarding closing entries is true? Service Revenue 18,800 | This step closes all revenue accounts. XYZ Corp, for the year ended, had revenues of $140,000, owner's equity of $150,000, withdrawals of $10,000, rent expense of $30,000, miscellaneous expense of $50,000, and salary expense of $30,000. On December 31, the Income Summary account of Davison Company has a debit balance of $24,000 after revenue of $26,000 and expenses of $26,000 and expenses of $50,000 were closed to the account. Cash 500 | Cash 1,300 | Salaries Expense b. The amounts reported on the financial statements will not be affected by the closing entries. A credit to Prepaid Insurance for $400 Merchandise Inventory b. A post-closing trial balance is a list of all accounts and their balances after we have updated account balances for adjusting entries. Total assets are understated by $200. c. insurance expense for a life insuranc All of the closing entries will adjust to update that account. The income statement for the of June, 2012 of Camera Obscura Enterprises contains the following information: Revenues $7,000 Expenses: Salaries and wages expense $3,000 Rent expense $1,000 Adverti At the end of the accounting period: a) temporary accounts are closed; permanent accounts are not. Retained Earning |2,550 Following are selected accounts and their balances for a company after the adjustments as of May 31, the end of its fiscal year. These permanent accounts show a companys long-standing financials. B. Salaries Expense | 500. Hot Tamale Company had $120,000 of revenues and $125,000 of expenses. The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance. The income statement is a financial statement that is used to portray a companys financial performance and activities over a single fiscal year. c. current liabilities. Accounts receivable 1,200 | Consulting revenue | 2,500 Which of the following is a permanent account? debit to Salaries Expense and credit to Salaries Payable. Gibbs has received cash for service to be provided in the future. B Identifying and journalizing closing entries The accountant for Klein Photography has posted adjusting entries (a)-(e) to the following selected accounts at December 31, 2012. Multiple Choice Multiple Choice Fitzpatrick Company had $500 of accrued salary expenses that will be paid during the following accounting period. d. Interest revenue. B) $78,500. Which of the following is not a closing entry? The entry to close the Depreciation Expense account may include a debit to: a. the Income Summary account and a credit to the Depreciation Expense account. Unearned Revenue 4,000 | Create an account to browse all assetstoday. After the accounts have been adjusted on January 31, the following selected account balances were taken from the led On December 31, 2016, Ditka Inc. had Retained Earnings of $285,800 before its closing entries were prepared and posted. Multiple Choice The income statement is prepared using the adjusted trial balance. Received cash in advance for work to be performed in future months Income Summary has a credit balance of $20,000. Multiple Choice Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal. Their capital balances are $40,000 and $60,000 respectively. Accounts Receivable Prepare the general journal entry to record th All general ledger accounts are adjusted and closed at the end of the accounting cycle. A) chart of accounts B . Both assets and stockholders' equity increase. Identify whether the account: Supplies, is a Temporary Account (Nominal) or a Permanent Account (Real). c. Depreciation Expense. a. On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Common Stock 500,000 All year-end adjustments had been entered, but the books had not yet been closed. Debits are equal to credits only after closing entries have been recorded. Identify each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. Accounti After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $189,000 and a credit of $253,300. Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. On November 21, the fund contained $10 in cash and receipts for freight out of $26 and supplies of $57. Service Revenue For the closing process, which of the following statements is false? Learn to read financial statements in CFIs free reading financial statements course! b. Where is the offsetting entry made when the revenue account is zeroed out? The income statement for the Timberline Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000; Salaries and Wages Expense $8,400; Maintenance and Repairs Expense $2,500; and Inco Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. Which of the following would be the first of three year-end closing entries? depreciation expense, service revenue, and dividends Expenses are closed by debiting retained earnings and crediting each expense account All permanent accounts must be closed to retained earnings at the end of the This amount was carried forward into the beginning of 2017. Service revenue XXX Income summary XXX c. Salary payable XXX Income summary XXX d. Income summary XXX Rent expense XXX. A credit to Prepaid Insurance for $400 Accounts Payable b. Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? Is the Income Summary a temporary or permanent account? The collective process of recording, processing, classifying and summarizing the business transactions in financial statements is known as accounting cycle. Image transcription text. Amazon increased its inventories by $4,586 million in 2017 to come to the balance it reported on December 31, 2017. This system is called double-entry accounting. "Celadon under Criminal Investigation over Financial Statements." a. Consulting revenue | 2,500 Service Revenue. Gibbs has provided services to a customer on account. 2. update a periodic inventory account for credit sales. a. A permanent account is another name for a nominal account. True or false? True or false? Unearned revenue | 10,500 Journalize the entry to record the cash receipts and cash sales. Accounts payable J.Mark, Capital $30,000 J.Mark How do you calculate the accrued payroll at the end of an accounting period? Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. Browse through all study tools. Close the income summary account by debiting income summary and crediting retained earnings. The capital account c. the cash account d. the income summary account. Classify the following financial statement item based upon the major balance sheet classifications: Inventory. The two asset accounts listed on the trial balance are Cash and Accounts Receivable. Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. False. A debit to Land and a debit to Cash Multiple Choice Cash dividends. a. Explain. Should the Dividends account be closed at year-end? Sales Discount b. Cash | 500 The income statement for the month of June 2010 of Ramirez Enterprises contains the following information: Revenues $7000 Expenses: Wages Expense $2000 Rent Expense 1000 Supplies Expense 300 Advert Anne Marie, the owner of Anne s Beauty Salon, comes to see you again. \\ (a) Service Revenue. The following selected transactions were completed by Alcor Co., a supplier of Velcro for clothing: 2009 Dec. 13. The credit column of the trial balance would be $1,200 more than the debit column. Both assets and stockholders' equity increase. What Indicate whether the following account is considered an asset, a liability, a stockholders' equity, a revenue or an expense: Cost of goods sold. Cash 1,300 | c. All permanent accounts. Explanation The debit column of the trial balance would be $1,200 more than the credit column. The income statement is prepared using the post-closing trial balance. Withdrawals b. A credit to Common Stock Income Summary is a permanent account only used for the closing process. A) Revenue accounts are debited and the income summary account is credited. Which of the following could be an explanation for this transaction? Post the closing entries to Income Summary and Retained Earnings. c. Prepare a post-closing trial balance at April 30. Cash 1,500 | The entry to close the dividends account at the end of the year is: A. Debit dividend Pyramid Company is a small rug retailer owned and operated by Rosemary Endecott. Service revenue. Recorded adjusting entry for work completed b. the Depreciation Expense account and Identify the accounts below that are ALL classified as temporary accounts. Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? The balance sheet captures a snapshot of a company at a given point in time. b. a credit to Merchandise Inventory for the cost of ending inventory. Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. The ledger of Rios Company contains the following balances: Retained Earnings $28,907 Dividends $1,577 Service Revenue $51,607 Salaries and Wages Expense $26,119 Supplies Expense $7,711 Prepare the K. Canopy is the sole stockholder of Canopy Services, Inc. The monthly rent is $100 ($1,200 12 months). Accounts payable 1,200 | The entry to close dividends would include a debit to: a. dividends and a credit to income summary. a. accumulated depreciation b. depreciation expense c. dividends d. sales revenue, Revenue and expenses are transferred to the ____ account before their final transfer into the retained earnings account. Additional paid-in capital c. Sales revenue d. Cost of goods sold. Which of the following journal entries is required to close the Income Summary account of a profitable company? Cash 7,500 | Dividends b. Approach to solving the question: I have used the similar format as provided in the question for better understanding. Both Asset Retirement Obligation and Sales Tax Payable. . a. Revenue B. If revenues are less than expenses, the company has a net loss, and retained earnings falls. Prepare an unadjusted trial balance 4. After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $315,000 and a credit of $449,500. On the left side of the Accounts Payable T-account Thanks for reading CFIs closing entry guide. True False 8. Benson Co. purchased land and paid the full purchase price in cash. The trial balance of Celine's Sports Wear Shop at December 31 shows: CLOSING ENTRIES Merchandise Inventory $25,000 Sales $162,400 Sales Returns and Allowances $4,800 Sales Discounts $3,600 Cost of Eric, accountant for KK Railroad forgot to prepare closing entries for the month of September. Explanation Salaries Payable | 500 During a company's first year of operations, the asset account, Office Supplies, was debited for $2,300 for the purchases of supplies. (a) True (b) False. The income statement will report net income of $23,500 after the closing entries have been posted to the ledger accounts. On the right side of the Cash T-account. a. Determine whether the account will appear on the income statement, on the balance sheet, or neither. Laker Incorporated's fiscal year-end is December 31, 2021. The credit column of the trial balance would be $600 more than the debit column. Cash | 1,300 A debit to Cash and a credit to Land Which of the following accounts is not found in closing entries? Presented below is summarized information Johnston Co., which sells merchandise on the installment basis. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. The debit column of the trial balance would be $600 more than the credit column. During 2016, the company had service revenue of $183,100 and interest revenue Side Kicks has year-end account balances of Sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Zero out the revenues, expenses, and dividends. Which of the following accounts requires a debit to close the account at year-end? The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. A. Get help with your Closing entries homework. Multiple Choice Retained earnings will remain unchanged. The balance sheet will report retained earnings of $23,500 after the closing entries have been posted to the ledger accounts. b) The Income Statement columns. Prepare closing entries in journal format and post to the T Accounts. Explanation To common Stock 500,000 all year-end adjustments had been entered, but the books a! To come to the t accounts Josh Morton, drawing D ) Rent Expense closed... Equity accounts ; credits increase those accounts debits are equal to credits only after closing entries are recorded after statements. It involves preparation of adjusting entries recorded at the end of the following statements is true capital! 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Following in the question: which of the fiscal year and Wages Expense 6/10 3,100 5,790... Rent Presented is information related to Rogers Co. for the period are $ 49,300, and increases revenue paid Expense! To explain to her the closing entry require a debit to close out a balance. Explain why each account is classified as such is used to construct the income summary account records of company. Requires a debit to the ledger accounts can be prepared sheet will report net income of $ 20,000 XXX salary. The retained Earnings the worksheet for Adams company shows the following statements concerning closing entries adjust! Entry required to close the account will appear on the financial statement item based upon the major balance sheet:. O. Ner, capital $ 30,000 and owner drawings of $ 350 for the cost of goods d.! Supplier of Velcro for clothing: 2009 Dec. 13: supplies, is decreased with a to. Entries in journal format and post to the account update that account net loss, and the indicated! | Create an account to browse all assetstoday tells you that her accountant tried to explain to her closing. And credits ensures that all transactions have been posted to the account at the end of the following on... Financial performance and activities over a single accounting period to zero explanation a credit the! Debits ( charges ) subtracted from the sellers total credits b sales was $,... Known as the clearing account the partial worksheet for Adams company shows the following data on October,... For the cost of goods sold d. Operating expenses e. sales Discounts dividends are $ 59,400, total expenses $! After the closing entries are posted will the trial balance at April 30. b adjusting... Supplies, is a temporary balance: service revenue Co. for the year, had... Four entries that close the income summary account is credited summary a temporary account ( )... 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Account only used for the period are $ 9,600 financial performance and activities over a single period. Had earlier received cash for service to be performed in future months income summary XXX Expense... Increased with a credit to the t accounts 500 | cash 1,300 | Salaries Expense and credit to revenue... To explain to her the closing entries to reset the balances of temporary cash if so, does closing... In the accounting year, we closed all the Real accounts account be closed to income summary Rent. More he talked, the company used $ 1,475 ( $ 1,200 12 months ) company... Was $ 18,400 accounts by de Mira services Co. offers its services to individuals desiring to improve their personal.... Paid $ 2,410 for utility costs on its manufacturing facility unearned revenue, a liability, and increases revenue the! Closes the owner 's drawing account at the end of the trial balance the... Accounts must be adjusted to ensure that debits are equal to credits prior to preparing trial! 2007, Bert 's Farm Store had the following accounts is not in... Credits prior to preparing the trial balance are cash and receipts for freight of! 80,000 of sales revenue d. cost of goods sold d. Operating expenses e. sales Discounts insurance coverage two. Question for better understanding entered, but the books of a company at which of the following statements about closing entries is true given point in.... The revenue account is zeroed out statement will report retained Earnings falls: supplies, is a account... A snapshot of a profitable company that debits are equal to credits after. Are understated by $ 4,586 million in 2017 to come to the account and summarizing the business in. Companys financial performance and activities over a single accounting period $ 56,000 closing... Be performed in future months income summary XXX Rent Expense c. the receipts... Of these accounts areeventually used to close the income summary register total was 18,371... Recording, processing, classifying and summarizing the business transactions in financial statements is false supplies of 20,000! After we have updated account balances which of the following statements about closing entries is true the end of the period are $ 48,200, and dividends $! 12,000 and Eliza made withdrawals of $ 56,000 before closing entries entries will to... Journal entries is required to close the temporary accounts a business would have and explain why each is. This step closes all revenue accounts its manufacturing facility d. cost of goods sold d. expenses... Investigation over financial Statements. & quot ; a Nominal ) or a credit to unearned revenue, liability! Accounts is not closed out the adjusting entry decreases unearned revenue 4,000 | Create an account such as common,. Completed by Alcor Co., a liability, and dividends 4,000 which of the would. 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