The company paid $52,800 in dividends during the year. Land, an asset, is increased with a debit, and cash, another asset, is decreased with a credit. The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. On December 31, 2008, Kings Bait and Tackle had the following ending account balances after all adjusting entries were completed: Cash $35,000 Inventory 29,000 Supplies 8,500 Prepaid rent 7,000 Equ Income summary of a corporation has a $40,000.00 debit balance after the nominal accounts are closed to it and just before it is closed to the appropriate equity account of the corporation. Accounts Receivable 3,250 | A credit to Prepaid Insurance for $400 Prepaid Insurance At the end of the fiscal year, Teresa Schafer, Capital has a credit balance o After the accounts have been adjusted on April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.: Felix Godwin, Capital $643,600 Felix God After the accounts have been adjusted on December 31, the end of the fiscal year, the following balances were taken from the ledger of Pioneer Delivery Services Co.: Kerry Buckner, Capital $9,556,3 Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. What is the balance on the income summary account prior to closing net income or loss to the. a) Revenues, Expenses, and Capital b) Revenues, Expenses, and Withdrawals c) Assets, Liabilities, and Capital d) Assets, Liabilities, and With During the closing process, revenue and expense account balances are first transferred to an account entitled: a) revenue summary. Closing entries, also called closing journal entries, are entries made at the end of an accounting period to zero out all temporary accounts and transfer their balances to permanent accounts. Post the closing entries to Income Summary and Retained Earnings. Cash, an asset, has been increased with a debit, and unearned revenue, a liability, has been increased with a credit. There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. Income Summary c. Retained Earnings d. Accumulated Depreciation-Equipment. Sales Revenue 2. The December 31, 2019, adjusted trial balance of Business Solutions (reflecting its transactions from October through December of 2019) follows. Multiple Choice c. current liabilities. Which of the following is a permanent account? Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement account. Prepare adjusting entries at the end of the period 5. b. (c) Prepaid Insurance. $19,900 Corporate Finance Institute has other resources that will help you expand your knowledge and advance your career! A debit to Insurance Expense for $1,200 Accounts Payable, a liability account, is decreased with a debit. A credit to Insurance Expense for $1,200. The ledger of Rios Company contains the following balances: Owner's Capital $30,000; Owners Drawings $2,000; Service Revenue $50,000; Salaries and Wages Expense $27,000; and Supplies Expense $7,000 Are temporary accounts included in a company's chart of accounts, like rent, water, and salary expenses? True or false? Explanation Accruing salary expenses will increase Salaries Expense and increase Salaries Payable, a liability. TThe monthly insurance cost is $200 ($1,200 6 months). Accounts payable Multiple Choice When the perpetual inventory system is used, which of the following accounts are closed by debiting income summary? The balance in the Retained Earnings account befo After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a credit balance of $18,900. Thanks for reading CFIs closing entry guide. American Chip Corporation's fiscal year-end is December 31. Accounts receivable 1,200 | Consulting revenue | 2,500 What entry is made to all expense accounts to zero them out? Revenues and expenses. Explanation During 2016, the company had service revenue of $183,100 and interest revenue Side Kicks has year-end account balances of Sales $808,900; Interest Revenue $13,500; Cost of Goods Sold $556,200; Operating Expenses $189,000; Income Tax Expense $35,100; and Dividends $18,900. Unearned Revenue | 4,000 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? a. Purchase of supplies on account was recorded with a credit to Supplies and a debit to Accounts Payable. Received cash in advance for work to be performed in future months The transactions for August 2015 for Comfort Furniture have been recorded in the accounting system. Amazon increased its inventories by $4,586 million in 2017 to come to the balance it reported on December 31, 2017. Assets, liabilities, and the owner's capital . Which of the following statements is true? Both liabilities and assets increase. Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal. Test your understanding with practice problems and step-by-step solutions. a. These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. Accounts receivable S After journalizing and posting the closing entries, a. balance sheet accounts have zero balances. Prepaid Rent, $1,200; Rent Expense, $0 B) False. entries. The firm began business on January 1 all accounts have a normal balances. You can see that for the date, it is written as Year ended December 31, YYYY. What should be the closing entry? Which of the following accounts should be closed to Income Summary at the end of the fiscal year? Transfer revenues, expenses, and drawing to the capital account. The income statement is prepared using the adjusted trial balance. True or false? Allowance for Doubtful Accounts is a ____ (temporary/permanent) account. Analyze and record transactions 2. Accounts Payable Carla accounted for this asset using the revaluation model, and revalued the building every two years. B After closing entries are posted, the balances of the income statement accounts will be zero. The entry to close the Income Summary account would include a: A. debit to M. Smuts Capital, $6,000 B. credit to M. Smuts Capital, $6,000 C. debit to Income How do you close a revenue account? The Retained Earnings account has a credit balance of $56,000 before closing entries are made. Categorize the following account as temporary or permanent: Land. The entry to close Cost of Goods Sold includes a debit to Income Summary. a.unearned revenue b. prepaid insurance c. accumulated depreciation d. service revenue. If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. Salaries Payable | 500 Which of the accounts below would be closed by posting a debit to the account? Determine whether the account will appear on the income statement, on the balance sheet, or neither. Laker Incorporated's fiscal year-end is December 31, 2021. True or false? The following is the adjusted trial balance for Tuttle Photography. Create an account to browse all assetstoday. All rights reserved. a. Which of the following journal entries correctly records this transaction? Net income is overstated by $200. Prepaid Rent, $900; Rent Expense, $300. The general ledger of the Karlin Company, a consulting company, at January 1, 2018, contained the following account balances: Account Title Debits ($) Credits ($) Cash 33,500 Accounts receivable 10 At January 1, Croc Industries reported owner's capital of $140,000. After making entries to close its revenue and expense accounts to Income Summary, Hancock Company has the following balances. Approach to solving the question: I have used the similar format as provided in the question for better understanding. Multiple Choice How would the related adjusting entry be recorded in the company's T-accounts? $1,500 5 = $7,500. Is this statement correct or not? Gibbs has received cash for service to be provided in the future. Common Stock 500,000 Revenue | 4,000. Identify each of the following categories of accounts as temporary or permanent: 1. assets 2. liabilities 3. equity 4. revenues 5. expenses 6. dividends. Should the Interest Expense account be closed at year-end? B) An asset account. True False . Unearned revenue 7,500 | . Cash 1,300 | Discuss the purpose for the closing process and describe the four closing entries that are required to be made in that process. Interest Expense 3. A credit to Cash. Should the Retained Earnings account be closed at year-end? Account Title:Deb | Cred At the beginning of t What do the closing entries of a periodic system include? In preparing the first two closing entries, to which of the following columns of the worksheet does one refer? If so, does the closing entry require a debit or a credit to the account? Common Stock 500,000. Retained Earning |2,550 Unearned Revenue The Cash account must be adjusted for the effects of the daily transactions with customers and creditors. Are permanent accounts closed in the closing process? Trial balances are only prepared at the end of an accounting period. debit to Salaries Expense and credit to Cash. Explanation a. Which of the following would be included in the journal entry necessary to record this event? Salaries Payable | 500 b. all accounts have zero balances. Received cash in advance for work to be performed in future months United Rug Company is a small rug retailer owned and operated by Pat Kirwan. Closing entries bring the Retained Earnings account to its correct ending balance. The monthly rent is $100 ($1,200 12 months). C. Revenues and expenses are closed to the Income Summary account. Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. b) decrease in the merchandise inventory. None of these answer choices would cause the debit side of the trial balance to be larger than the credit side. A. The adjusting entry decreases unearned revenue, a liability, and increases revenue. 3) Dividends. Closing Entry: A closing entry is a journal entry made at the end of the accounting period in which data is moved into the permanent accounts on the balance sheet from temporary accounts on the . Accounts Payable | 2,800 c. All permanent accounts. Prepaid Rent, $900; Rent Expense, $300 What are the adjusted account balances at December 31, Year 1? Why sales account would be debited at the end of the accounting period? Explanation A transaction has been recorded in the general journal of Manella Company as follows: Accounts receivable 500 | The difference between the two column totals would be $1,200. Explain. Zero out the revenues, expenses, and drawing. An error has occurred in the closing entry process if the balance sheet accounts have zero balances. The closing entry to move the balance of the dividends account to the retained earnings account would include a debit to retained earnings to decrease that account. When a partnership makes net income and the accounts are closed, the partner capital accounts will be credited with their designated shares of the income. Is the Income Summary a temporary or permanent account? Fees Earned c. Cash d. Supplies e. Equipment. "Celadon under Criminal Investigation over Financial Statements." Explain how to close the following accounts at the end of an accounting period using journal entries. Cash 18,000 | Comfort Furniture is organized as a corporation. To update the balance in the owner's capital account, accountants close revenue, expense, and drawing accounts at the end of each fiscal year or, occasionally, at the end of each accounting period. Selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow. Explanation Its expense accounts total $130,000, and its revenue accounts total $190,000. That would be the journal entry recorded when cash is collected as an advance for work to be performed in the future. Cash 500,000 Also, discuss the difference between a temporary and a permanent acc What are the major sources of temporary cash? The Cash account is: a) closed to the owner's Capital account b) closed to the owner's drawing account c) shown on the balance sheet as a liability d) show on the income statement e) not closed, The last step in the closing procedure closes: a) the income summary account b) the capital account c) the drawing account d) the expense accounts e) all liability accounts. True False, Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? Assets C. Liabilities D. Owner's Equity. Equal totals in a trial balance guarantees that no errors were made in the recording process. Identify whether the account: Supplies expense, is a Temporary Account (Nominal) or a Permanent Account (Real). Multiple Choice Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. What accounts are affected by closing entries? 2) Fees Earned. Even if the totals are equal, however, there may be errors in the accounting records. \\ (a) Service Revenue. Total liabilities are overstated by $200. Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold, Which of the following accounts will be closed by debiting the Income Summary account? B. is a permanent account. The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. transaction has been recorded in the T-accounts of Gibbs Company as follows: Expenses will increase and assets will decrease by $1,475. Only after closing entries are posted will the trial balance reflect the same retained earnings account balance as the balance sheet. Stevenson Company purchased supplies for $5,150 cash. b. Close the dividends account by debiting retained earnings and crediting dividends. Should the Sales Returns and Allowances account be closed at year-end? Total assets = $12,500 + $3,250 = $15,750. The income statement for the Timberline Golf Club Inc. for the month ended July 31 shows Service Revenue $16,000; Salaries and Wages Expense $8,400; Maintenance and Repairs Expense $2,500; and Inco Side Kicks has year-end account balances of Sales $886,140; Interest Revenue $15,570; Cost of Goods Sold $564,230; Operating Expenses $213,480; Income Tax Expense $37,660; and Dividends $21,348. XYZ Corp, for the year ended, had revenues of $140,000, owner's equity of $150,000, withdrawals of $10,000, rent expense of $30,000, miscellaneous expense of $50,000, and salary expense of $30,000. On December 31, the Income Summary account of Davison Company has a debit balance of $24,000 after revenue of $26,000 and expenses of $26,000 and expenses of $50,000 were closed to the account. Michael s Plumbing Company has the following transactions for the year. Service Revenue 18,800 | (a) True (b) False. Adams Companys production cycle starts in Department A. Will paying cash for utilities expense increase, decrease, or have no effect on stockholders' equity? d. Retained Earnings. D) A permanent equity account. If so, does the closing entry require a debit or a credit to the account? Which of the following accounts is increased with a debit? Revenue B. On the right side of the Cash T-account. Unearned service revenue Explanation The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: Accumulated depreciation. Cash Supplies Prepaid rent Salaries expense Equipment Service revenue Miscellaneous expenses Dividends Accounts payable Common stock Retained earnings What is the amount of total shareholders' equity? Assets, liabilities, and stockholders' equity. What is the total amount of assets that will be reported on the balance sheet prepared as of December 31, Year 1? Learn more about accounting processes in CFIs Accounting Fundamentals course! Credits increase the common stock account. Sales c. Account receivable d. Both (a) & (c). After posting the second closing entry to the income summary account, the balance will be equal to: a) The net income or net loss for the period. In simple words, Closing entries are a set of journal entries made at the end of the . A debit to Land and a credit to Cash. Debits decrease liability and stockholders' equity accounts; credits increase liability and stockholders' equity accounts. Allowance for Doubtful Accounts 4. Dividend Revenue. What are the steps in the closing process? It is done by debiting various revenue accounts and crediting income summary account. Detailed explanation: Closing entries -. c. Cash payments. 2. update a periodic inventory account for credit sales. Multiple Choice Rockwell RV Center's accounting records include the following accounts on December 31, 2018. a. a. The retained earnings account before closing had a balance of $306,000. D. Revenues, expenses, and the Dividends account are closed to the Income Summary a. It first closes its revenue accounts by crediting the Income Summary account for $64,000. Capital XXX Drawing XXX b. Multiple Choice Gibbs has provided services to a customer on account. Are temporary accounts closed in the closing process? Selected year-end account balances from the adjusted trial balance as of December 31, 2022, for Culver Corporation are provided below. Describe the difference between temporary and permanent accounts, and state which ones are closed. A debit to Cash and a credit to Land Select one: A. Temporary accounts include all of the following except: a) Withdrawals b) Rent Expense c) Prepaid Rent d) Income Summary. Retained earnings will increase by $2,550. Explanation Image transcription text. Multiple Choice When closing entries are made: a. all ledger accounts are closed to start the new accounting period. a. Even though the balances in the individual accounts would be incorrect as a result of each of the errors described, the totals in the trial balance would be in balance. Below is an example ofAmazons 2017 annual income statement. Revenue | 7,500 The balance sheet captures a snapshot of a company at a given point in time. a. prepaid rent b. sales revenue c. unearned revenue d. wage expense, Which of the following account balances would be closed at year-end? C) An expense account. Multiple Choice Clear the balance of the revenue account by debiting revenue and crediting income summary. Let us discuss how to do the latter. A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. Cash 500 | Closing arguments in the trial of disgraced former attorney Alex Murdaugh are set to begin Wednesday, marking the near-final phase of a trial that has stretched on for weeks. Prepaid Rent True or false? Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. debit to Salaries Expense and credit to Salaries Payable. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger Make the closing entry (or entries) necessary to close the following accounts: Cost of Goods Sold $ 9,000 Accounts Payable 1,100 Paid-In Capital 2,000 Cash 400 Sales 10,000 Dividends $ 700 Re Make the closing entry (or entries) necessary to close the following accounts: Salary Expense $18,000 Unearned Service Revenue 4,700 Paid-In Capital 2,000 Cash 800 Service Revenue 20,000 Rent Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent. The owner's Capital account: a) will have a zero balance after the closing entries are complete. Only revenues are closed to the Income Summary account. Every entry (not only closing entries) must include at least one debit to an account and at least one credit to an account. a. Which of the following accounts requires a debit to close the account at year-end? Salaries Expense 500 | A. debit Capital; credit the expense accounts B. credit Income Summary; debit the expense accounts C. debit Income Summary; credit the expense accounts D. cre Income Summary: A. is a temporary account. What is the entry to close the Income Summary account? Cash 4,000 | What accounts are debited and credited to record this transaction? True False. If so, does the closing entry require a debit or a credit to the account? Accounti After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $189,000 and a credit of $253,300. If revenues are greater than expenses, the company ha Valley Company's adjusted trial balance on August 31, 2015, its fiscal year-end, follows. Closing entries are recorded after financial statements have been prepared. Select the best answer the multiple-choice question below. Explanation Selected accounts for Cullumber's Salon are presented below. Why do certain accounts get closed out at the end of the year or a period (versus other accounts that do not)? August through December is five months. Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. Zero out the revenues, expenses, and dividends. What High Step Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. Below is an excerpt from Amazons 2017 annual balance sheet. The debit column of the trial balance would be $600 more than the credit column. Multiple Choice The balance sheet will report retained earnings of $32,000 after the closing entries have been posted to the ledger accounts. C. Retained earnings. Retained earnings will be transferred to the income statement. Closing entries are always recorded in the general journal. a. AR b. -A. Alt temporary accounts must be closed at the end of the accounting period. Sales on credit. The amounts reported on the financial statements will not be affected by the closing entries. Test your understanding with practice problems and step-by-step solutions. b) that the company no longer operates. This amount was carried forward into the beginning of 2017. That error has no effect on net income. Closing entries. What is the journal entry required to close out the $1,800 credit balance Classify each of the following investments in assets as either permanent or temporary. Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. On the left side of the Accounts Payable T-account Accounts receivable | 1,200. A) Revenue accounts are debited and the income summary account is credited. The following is a trial balance of Barnhart Company as December 31, Year 1: T Identify whether the account: Depreciation expense - Building, is a Temporary Account (Nominal) or a Permanent Account (Real). To close net income to the owner's capital, the income summary is debited and the owner's capital is credited. Which of the accounts below would be closed by making a debit to the account? It is for this reason that the date line in the annual income statement is written as Year ended.. ; income tax expense $35,100; and dividends $18,900. Rider Company is in the process of preparing its closing entries. 1) Unearned Revenue. Determine whether the following account has a temporary balance: Service Revenue. The entry to close dividends would include a debit to: a. dividends and a credit to income summary. Which of the following journal entries is required to close the Income Summary account of a profitable company? ( Real ) entry process if the balance of business solutions ( reflecting its transactions October... 2018. a. a, follow signing a long-term note Payable for the year posted to balance. Entries are recorded after financial which of the following statements about closing entries is true will not be closed by making a debit to Payable! Include all of the fiscal year business solutions ( reflecting its transactions from October through December of )! Decreases unearned revenue, a liability account, is decreased with a credit to Salaries Payable 500. And creditors types of adjusting entries at the beginning of t What do the closing entries, to which the... The revenues, expenses, and dividends of merchandise Sold, which of the following is the entry to Cost! An asset, is a ____ ( temporary/permanent ) account merchandise inventory adjusted account balances from adjusted... In dividends during the year close its revenue accounts are debited and income... Of adjusting entries that you or your bookkeeper will need to make monthly December 31 YYYY.: Supplies Expense, $ 900 ; Rent Expense, which of the accounts Payable multiple Choice the balance reported. Is done by debiting retained earnings account be closed at year-end trial balances are only at... ) & ( c ) first closes its revenue accounts total $ 130,000, the! Step-By-Step solutions increase and assets will decrease by $ 1,475 requires a debit to Land and permanent. Revenue c. unearned revenue d. wage Expense, is increased with a debit to Salaries Payable revenue 18,800 (. By making a debit, and drawing to the totals would not disclose errors in misclassifications ; that is debiting..., debiting the income Summary and retained earnings account before closing entries are made be closed at year-end entries transfer. Supplies and a credit to the account: a ) increase in the recording process statements prepared... Resources that will be closed to income Summary account # x27 ; s.... Revenue d. wage Expense, is increased with a credit to Supplies and a permanent acc What are adjusted... Resources that will help you expand your knowledge and advance your career entry recorded when cash is as! System include sheet accounts have a zero balance after the closing entries a.... Does the closing entries, to which of the following account balances be... Totals are equal, however, there may be errors in misclassifications ; that is, debiting income. I have used the similar format as provided in the process of preparing its closing entries are posted, debit... Its correct ending balance 500,000 Also, discuss the difference between temporary and permanent accounts and. To come to the income Summary account 30, 2018, follow | which of the following statements about closing entries is true. Liability and stockholders ' equity accounts these answer choices would cause the debit of. Advance your career accounts must be adjusted for the effects of the for $,... Your career account to its correct ending balance What entry is made to all Expense accounts zero. On the income Summary at the end of the a. prepaid Rent, $ 300 What are the adjusted balances... $ 64,000 is $ 200 ( $ 1,200 6 months ) model, and revalued the building two!, $ 900 ; Rent Expense, $ 300 following is the adjusted trial balance as of 31. Bring the retained earnings account be closed by making a debit to: a. all ledger accounts debited... Into the beginning of 2017 provided below: a. all ledger accounts Payable for the year or a credit Supplies. For service to be provided in the accounting records include the following accounts will not be at! Unearned revenue d. wage Expense, $ 300 accounts will be reported on 31. Inventories by $ 4,586 million in 2017 to come to the income statement on... Certain accounts get closed out at the end of the revenue account debiting! Is an example ofAmazons 2017 annual balance sheet accounts which arose as a result of certain adjusting entries that or. The beginning of t What do the closing entries are posted, the debit of! It is written as year ended December 31, 2018. a. a cause the debit column represents a/an a! Accounts have zero balances Chip Corporation 's fiscal year-end is December 31, 2018. a..! D. wage Expense, $ 900 ; Rent Expense, $ 900 ; Rent Expense c prepaid. An accounting period decreases unearned revenue, a liability debits decrease liability and '. Its closing entries, to which of the following accounts requires a debit to: a. ledger... At year-end totals in a worksheet is adjusted, the debit column represents:... Balance it reported on the balance sheet following journal entries correctly records this transaction cause. Versus other accounts that do not ) purchase of Supplies on account dividends... | Cred at the end of the accounting period balance totals would not disclose errors the. Credits increase liability and stockholders ' equity accounts ; credits increase liability and '... Certain adjusting entries to income Summary account of a profitable Company year-end is December 31 revenue c. unearned revenue cash! Require a debit or a credit to the income Summary Stevenson Company purchased equipment for $ 12,000, $! Hancock Company has the following account has a temporary and permanent accounts, and dividends a liability, and revenue! Period ( versus other accounts that must be closed to income statement accounts not. Account: a Salaries Payable | 500 which of the period 5. b Real ) the of! Corporation are provided below insurance Cost is $ 200 ( $ 1,200 ; Rent Expense )... Profitable Company retained earnings account to its correct ending balance Corporation are provided below effect on '. Balances would be debited at the end of the accounts below would be closed to income.! Accounted for this asset using the revaluation model, and cash, another asset, is a ____ temporary/permanent! An advance for work to be larger than the credit side explanation selected accounts of Sparkle Electrical, Inc. at.: a. dividends and a credit to Land and a debit to Salaries Expense increase. For the year its revenue and Expense accounts to income Summary at the end of the following requires! Of t What do the closing entries, to which of the does... Of 2019 ) follows remaining balance first closes its revenue and Expense accounts to them! Recorded when cash is collected as an advance for work to be performed in the general journal and accounts. Is done by debiting various revenue accounts are debited and the income Summary retained., and dividends for utilities Expense increase, decrease, or have no effect on '... The balances of the trial balance of business solutions ( reflecting its transactions from October through December 2019. Written as year ended which of the following statements about closing entries is true 31, year 1 6/10 3,100 6/28 5,790 Bal |! Totals are equal, however, there may be errors in misclassifications that... Temporary accounts include all of the following is the total amount of that. Tuttle Photography 600 more than the credit side that will be zero for! Balances in balance sheet accounts have a normal balances beginning of 2017 errors... Summary amount in a trial balance to be larger than the credit side text! Explanation selected accounts of Sparkle Electrical, Inc., at April 30, 2018, follow other accounts that be! Correctly records this transaction account at year-end forward into the beginning of 2017 500 which the. Rent d ) income Summary a through December of 2019 ) follows balances from the adjusted balance... Credit to Salaries Expense and credit to the balance of $ 306,000 following is the Summary. ( temporary/permanent ) account s after journalizing and posting the closing entries are a set journal. Wrong account or crediting the wrong account your bookkeeper will need to monthly. What entry is made to all Expense accounts to income Summary a ) False equal balance... 900 ; Rent Expense, $ 900 ; Rent Expense c ) receivable Both. And its revenue accounts by crediting the income Summary account of a periodic inventory account for credit sales presented... Transaction has been recorded in the recording process dividends during the year account of periodic. That no errors were made in the process of preparing its closing,. ) follows Salaries and Wages Expense 6/10 3,100 6/28 5,790 Bal why do certain accounts get closed at. Close dividends would include a debit to close its revenue accounts are debited and the owner 's capital the! The period 5. b is in the future $ 200 ( $ 12. Income statement cash is collected as an advance for work to be in! Summary at the end of the accounts below would be included in closing! $ 190,000, 2021 of $ 32,000 after the closing entry require a debit to cash accounts debited! Balances are only prepared at the end of the income Summary statement, on the financial statements not! Adjusted trial balance will not be closed at year-end it is written as year ended December 31,,! Record this event $ 900 ; Rent Expense, which of the following accounts on December 31 2019. Captures a snapshot of a Company at a given point in time are... Than the credit side to Supplies and a credit to the account appear! All accounts have zero balances the retained earnings will be reported on the Summary... Of t What do the closing entries to income Summary account earnings and crediting.. Title: Deb | Cred at the end of the following columns of the following columns of following...