Question

On January 1, 2021, Red Flash Photography had the following balances: Cash, $16,000; Supplies, $8,400; Land, $64,000; Deferred Revenue, $5,400; Common Stock $54,000; and Retained Earnings, $29,000. During 2021, the company had the following transactions:

1.		February		15		Issue additional shares of common stock, $24,000.
2.		May		20		Provide services to customers for cash, $39,000, and on account, $34,000.
3.		August		31		Pay salaries to employees for work in 2021, $27,000.
4.		October		1		Purchase rental space for one year, $16,000.
5.		November		17		Purchase supplies on account, $26,000.
6.		December		30		Pay dividends, $2,400.

The following information is available on December 31, 2021:

1. Employees are owed an additional $4,400 in salaries.
2. Three months of the rental space has expired.
3. Supplies of $5,400 remain on hand.
4. All of the services associated with the beginning deferred revenue have been performed.

5. Prepare closing entries. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
  

Required information Journal entry worksheet < 1 2 3 Record the entry to close the dividends account. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021

Answer 1

Closing Entries

Date	account	debit	credit
Dec 31	Service revenue	78,400
	Income Summary		78,400
	(Revenues account closed)
Dec 31	Income summary	64,400
	Salaries expenses		31,400
	Rent expenses		4,000
	Supplies expenses		29,000
	(Expenses account closed)
Dec 31	income Summary	14,000
	Retained earnings		14,000
	( Income trf to retained earnings account)
Dec 31	retained earnings	2,400
	Dividends		2,400
	(Dividends account closed)

Working notes

T accounts

Cash

Bal	16,000	aug 31	27,000
Feb 15	24,000	Oct 1	16,000
May 20	39,000	Dec 30	2400
Bal	33,600

Common stock

		Bal	54,000
		Feb 15	24,000
		Bal	78,000

Service Revenue

		May 20	39,000
		May 20	34,000
		Bal	73,000

Account Recievable

May 20	34,000

Salaries expenses

Aug 31	27,000

Prepaid rent

Oct 1	16,000

Supplies

Bal	8,400
Nov 17	26,000
Bal	34,400

Account payable

		Nov 17	26,000

Dividends

Dec 30	2400

Unadjusted trail balance

Account	debit	credit
Cash	33,600
Supplies	34,400
Land	64,000
Deffered revenue		5,400
Common stock		78,000
Retained earnings		29,000
Service Revenue		73,000
Account Recievable	34,000
Salaries expenses	27,000
Prepaid rent	16,000
Account payable		26,000
Dividends	2400
Total	211,400	211,400

Adjusting t accounts

Salaries expenses

Bal	27,000
Dec 31	4,400
Bal	31,400

Salaries payable

Dec 31

4,400

Prepaid rent

Bal	16,000	Dec 31	4,000
Bal	12,000

Rent expenses

Dec 31	4,000

Supplies

Bal	34,400	Dec 31	29,000
Bal	5,400

Supplies expenses

Dec 31

29,000

Deffered revenue

Dec 31

5,400

Bal

5,400

Service Revenue

		Bal	73,000
		Dec 31	5,400
		Total	78,400

Adjusted Trail balance

Account	debit	credit
Cash	33,600
Supplies	5,400
Land	64,000
Prepaid rent	12,000
Common stock		78,000
Retained earnings		29,000
Service Revenue		78,400
Account Recievable	34,000
Salaries expenses	31,400
Salaries payable		4,400
Rent expenses	4,000
Account payable		26,000
Dividends	2,400
Supplies expenses	29,000
Total	215,800	215,800