Question

On December 31, 2018, Ditka Inc. had Retained Earnings of $283,800 before its closing entries were prepared and posted. During 2018, the company had service revenue of $184,100 and interest revenue of $89,300. The company used supplies in the amount of $95,900, advertising expenses were $18,000, salaries and wages totaled $20,700, and income tax expense was calculated as $16,900. During the year, the company declared and paid dividends of $7,600.

Prepare the closing entries dated December 31, 2018. Prepare T-account for the Retained Earnings account. Enter the beginning balance into the T-account, post the closing entries, and then determine the ending balance.

Answer 1

Credit Date Accounts December 31, 2018 Service revenue Interest revenue Income summary Debit $184,100 $89,300 $273,400 $151,500 December 31, 2018 Income summary Supplies expense Advertising expenses Salaries and wages expense Income tax expense $95,900 $18,000 $20,700 $16.900 $121,900 December 31, 2018 Income summary Retained earnings $121,900 $7,600 December 31, 2018 Retained earnings Dividends $7,600 Dividends Ending Balance Retained Earnings $7,600 Beginning balance | $283,800 $398,100 Income summary $121,900 $405,700 $405,700 Ending balance $398,100