Question

Nash has year-end account balances of Sales Revenue Administrative Expenses $203,880, Income entries before credit entries)

$833,235, Interest Revenue $12,770, Cost of Goods Sold $600,705. Tax Expense $32,408, and Dividends $20,388. Prepare the year-end closing entries. when amount is entered. Do not indent manually. If no entry is required, select "No entry for (Credit account titles are automatically indented the account titles and enter O for the amounts. List all debit

Answer 1

To prepare year-end closing entries, revenue and expense accounts are closed to the Income Summary, which is then closed to Retained Earnings. Dividends are closed directly to Retained Earnings. These entries ensure that temporary accounts are reset for the new period.

Step-by-step explanation:

The student has provided the year-end account balances and has asked for help in preparing the year-end closing entries. The process of preparing closing entries involves closing out temporary accounts, including revenue and expense accounts, to the owner's capital account or retained earnings. This resets the balances of these temporary accounts to zero for the start of the new accounting period.

Year-End Closing Entries:

Close Revenue accounts to Income Summary.
Debit Sales Revenue $833,235
Debit Interest Revenue $12,770
Credit Income Summary $846,005

Close Expense accounts to Income Summary.
Debit Income Summary $837,993
Credit Cost of Goods Sold $600,705
Credit Administrative Expenses $203,880
Credit Tax Expense $32,408

Close Income Summary to Retained Earnings.
Debit Income Summary $8,012
Credit Retained Earnings $8,012

Close Dividends to Retained Earnings.
Debit Retained Earnings $20,388
Credit Dividends $20,388