Final answer:
To prepare December 31 closing entries, close all revenue and expense accounts to the Income Summary account (901). Following this, transfer the net income or loss to Retained Earnings. For the post-closing trial balance, list all the remaining accounts with balances and ensure total debits equal total credits.
Step-by-step explanation:
Closing Entries and Post-Closing Trial Balance
To prepare the December 31 closing entries, we need to close out all revenue and expense accounts to the Income Summary account (901). Assuming all revenues and expenses have been properly recorded throughout the year, we would debit each revenue account and credit the Income Summary for the total revenue amounts. Then, we would credit each expense account and debit the Income Summary for the total expense amounts.
Next, the balance in the Income Summary, which now represents the net income (or loss), would be transferred to Retained Earnings. If there is a net income, debit Income Summary and credit Retained Earnings. If there is a net loss, the entry is reversed.
Finally, to prepare the post-closing trial balance at December 31, list all the accounts with balances after the closing entries (typically asset, liability, and equity accounts, including the updated Retained Earnings account). The total debits should equal the total credits, confirming that the books are balanced after the closing process.
The beginning balance of Retained Earnings was $37,600 and this will have increased or decreased depending on the net income or loss transferred from the Income Summary.