Question

Assume that the entry closing total revenues of $284,900 and total expenses of $212,600 has been made for the year ending December 31. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $330,000 and Teresa Schafer, Drawing has a balance of $27,600.

A. Journalize the entry required to close the Teresa Schafer, Drawing account.
B. Determine the amount of Teresa Schafer, Capital at the end of period.

Answer 1

Answer and Explanation:

a. The journal entry to record the closing of drawing account is given below:

Teresa Schafer, Capital $27,600

Teresa Schafer, Drawing $27,600

(Being closing of drawing account is recorded)

b. The ending capital is

= Credit balance of capital - drawings

= $330,000 - $27,600

= $302,400