Question

The company's adjusted trial balance includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Retained earnings, $59,000; Dividends, $2,000; Fees Earned, $56,000; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances. Prepare the first closing entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Answer 1

Date	Account title	Debit	Credit
	Fee earned	$56000
	Income summary		$56,000
	(To close Revenue accounts)

Date	Account title	Debit	Credit
	Income summary	$48000
	Depreciation Expense		$25,000
	Salaries Expense		$23,000
	(To record closing of expenses accounts)

Answer 2

The first step in preparing closing entries is to close the revenue accounts first by transferring their balances to income summary account.

DATE	GENERAL JOURNAL	DEBIT	CREDIT
Dec 31	Fees earned	56,000
	Income summary		56,000
	(to close revenue account)