Question

"on january 1, 2024, the general ledger of grand finale fireworks includes the following account balances: accounts debit credit cash $44,600 accounts receivable 48,300 supplies 9,400 equipment 83,000 accumulated depreciation $10,900 accounts payable 16,500 common stock, $1 par value 19,000 additional paid-in capital 99,000 retained earnings 39,900 totals $185,300 $185,300 during january 2024, the following transactions occur: january 2 issue an additional 2,200 shares of $1 par value common stock for $44,000. january 9 provide services to customers on account, $19,700. january 10 purchase additional supplies on account, $6,800. january 12 purchase 1,000 shares of treasury stock for $22 per share. january 15 pay cash on accounts payable, $18,400. january 21 provide services to customers for cash, $51,000. january 22 receive cash on accounts receivable, $18,500. january 29 declare a cash dividend of $0.30 per share to all shares outstanding on january 29. the dividend is payable on february 15. (hint: grand finale fireworks had 19,000 shares outstanding on january 1, 2024, and dividends are not paid on treasury stock.) january 30 resell 700 shares of treasury stock for $24 per share. january 31 pay cash for salaries during january, $43,900. the following information is available on january 31, 2024. unpaid utilities for the month of january are $8,100. supplies at the end of january total $7,000. depreciation on the equipment for the month of january is calculated using the straight-line method. at the time the equipment was purchased, the company estimated a service life of three years and a residual value of $11,900. accrued income taxes at the end of january are $3,000. Record the entry to close the expense accounts.

Record the entry to close the revenue accounts.

Record the entry to close the dividends account."

Answer 1

To close the expense accounts, debit each expense account and credit the income summary account, then transfer the balance of the income summary account to the retained earnings account. To close the revenue accounts, debit the income summary account and credit each revenue account, then transfer the balance of the income summary account to the retained earnings account. To close the dividends account, debit the retained earnings account and credit the dividends account.

Step-by-step explanation:

To record the entry to close the expense accounts, you need to transfer the balances of all expense accounts to the income summary account. This is done by debiting each expense account and crediting the income summary account with their respective balances. After that, you need to transfer the balance of the income summary account to the retained earnings account by debiting the income summary account and crediting the retained earnings account.

To record the entry to close the revenue accounts, you need to transfer the balances of all revenue accounts to the income summary account. This is done by debiting the income summary account and crediting each revenue account with their respective balances. After that, you need to transfer the balance of the income summary account to the retained earnings account by debiting the retained earnings account and crediting the income summary account.

To record the entry to close the dividends account, you need to transfer the balance of the dividends account to the retained earnings account. This is done by debiting the retained earnings account and crediting the dividends account.

Answer 2

Closing entries for a company’s general ledger involve zeroing out the expense accounts by debiting Retained Earnings and crediting each expense account, closing revenue accounts by debiting them and crediting Retained Earnings, and closing the dividends account by debiting Dividends and crediting Retained Earnings.

Step-by-step explanation:

The student's question is concerned with recording the closing entries for a company's general ledger accounts. This will involve three primary steps: closing the expense accounts, closing the revenue accounts, and closing the dividends account. These entries are essential for transferring the balances from temporary accounts to the Retained Earnings account, preparing the company's books for the next accounting period. As the specific numbers for revenues, expenses, and dividends are not provided in the provided details, we'll proceed with a general explanation of how to make these closing entries.

Closing Expense Accounts:

To close expense accounts, you would debit the Retained Earnings account and credit each individual expense account for the amount of its respective balance, thus bringing each expense account balance to zero.

Closing Revenue Accounts:

For revenue accounts, the process is reversed. You would debit each revenue account to bring its balance to zero, and credit Retained Earnings for the total revenue amount.

Closing Dividends Account:

Finally, to close the dividends account, you would debit the Dividends account and credit Retained Earnings for the total amount of dividends paid. This reduces Retained Earnings by the amount of the dividends distributed.

Each of these transactions would typically occur after the financial statements for the period have been prepared and just before the start of the new accounting period. It is also important to remember that for the purpose of these closing entries, we do not consider the impact of temporary differences due to items such as unpaid utilities, supplies, depreciation, and accrued taxes, as adjusting entries for these items would have been made prior to the closing process.