Question

Post to the Retained Earnings and Income Summary accounts. (Post entries in the order of journal entries presented in the previous part. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 

Prepare a post-closing trial balance at July 31. 

Exercise 4-8 

Pronghorn Company ended its fiscal year on July 31, 2019. The company's adjusted trial balance as of the end of its fiscal year is shown below. 

Answer 1

Closing entries:

Date	Account title and Explanation	Debit	Credit
July 31	Service revenue	$65,000
	Rent revenue	$6,000
	Income summary		$71,000
	[To close revenue accounts]
July 31	Income summary	$79,100
	Depreciation Expense		$8,000
	Salaries and wages expense		$56,600
	Utilities expense		$14,500
	[To close expenses accounts]
July 31	Retained earnings	$8,100
	Income summary [79,100-71,000]		$8,100
	[To close income summary account]
July 31	Retained earnings	$16,500
	Dividends		$16,500
	[To close dividends account]

Ledger:

Retained Earnings
Date	Explanation	Debit	Credit	Balance
July 31	Balance		$26,000	$26,000
July 31	Close net income/loss	$8,100		$17,900
July 31	Close dividends	$16,500		$1,400
Income Summary
Date	Explanation	Debit	Credit	Balance
July 31	Close revenues		$71,000	$71,000
July 31	Close expenses	$79,100		($8,100)
July 31	Retained earnings		$8,100	$0

Post-closing Trial balance:

Pronghorn Company
Post-closing Trial Balance
July 31,2018
Account titles	Debit	Credit
Cash	$8,550
Accounts Receivable	$8,500
Equipment	$15,900
Accumulated depreciation-equip.		$7,300
Accounts payable		$4,050
Unearned Rent revenue		$2,400
Common stock		$17,800
Retained earnings		$1,400
Total	$32,950	$32,950