Question

A partial unadjusted trial balance for Air Cargo Company reflected the following: Account Balance Debits Credits Service revenue 80,000 Operating expenses 53,000 Wage expense 28,000 Wages payable -0 Interest receivable 8,000 Interest revenue 9,000 Subsequently, Air Cargo Company recorded the following adjusting entries at the end of the accounting year, December 31, 2019: Wages expense 2,000 Wages payable 2,000 Interest receivable 1,000 Interest revenue 1,000 Income Tax Expense 3,000 Income Tax Payable 3,000 Given the information above, prepare the closing entry for Air Cargo Company at December 31, 2019. (10 points)

Please answer in a grid format so that I can tell what is being credited and what is being debited and in what order. Thank you

Answer 1

Account Adjustments Debit Credit Unadjusted Debit Credit $ 80,000 $ 53,000 $ 28,000 $ 2,000 Adjusted Debit Credit $ 80,000 $ 53,000 $ 30,000 $ 2,000 $ 9,000 $ 10,000 $ 3,000 $ 3,000 $ Service revenue Operating expense Wage expense Wages Payable Interest recievable Interest Revenue Income Tax expense Income Tax Payable 2,000 $ 8,000 $ 1,000 $ 9,000 $ 1,000 $ 3,000 $ 3,000 $ 89,000 $ 89,000 $ 6,000 $ 6,000 $ 95,000 $ 95,000

Income Statement Revenue Service revenue $ 80,000 Interest recievable $ 10,000 $ 90,000 Expense Operating expense $ Wage expense $ Income Tax expense $ 53,000 30,000 3,000 $ 86,000 Net Income $ 4,000

Closing entries $ 90,000 Revenue Income Summary $ 90,000 $ 86,000 Income Summary Expenses $ 86,000 $ 4,000 Income Summary Retained earnings $ 4,000

Adjusting entries explanation:

1. Wages were outstanding at the end of the month, which is not payed yet

2. Interest recievable has arised but not yet recieved

3. Tax expense has accrued but not yet paid