Question

The ledger of Rios Company contains the following balances: Retained Earnings $30,000, Dividends $2,000, Service Revenue $50,000, Salaries and Wages Expense $27,000, and Supplies Expense $7,000. Prepare the closing entries at December 31. Post closing entries; underline and balance T- accounts.

Answer 1

To prepare the closing entries at December 31, we credit the revenue accounts and debit the expense and dividend accounts. The closing entries are then posted to the T-accounts, underlining them and calculating the new balance of the Retained Earnings account.

Step-by-step explanation:

To prepare the closing entries at December 31, we need to close the temporary accounts (revenue, expense, and dividend accounts) and transfer their balances to the Retained Earnings account. We will credit the revenue accounts and debit the expense and dividend accounts.

Here are the closing entries:

Service Revenue: credit $50,000

Salaries and Wages Expense: debit $27,000

Supplies Expense: debit $7,000

Dividends: debit $2,000

Now, we can post the closing entries to the T-accounts. Underline the T-accounts and calculate the new balance of the Retained Earnings account by adding the credits and subtracting the debits.