Question

Automation Services Co. offers its services to companies desiring to use technology to improve their operations. After the accounts have been adjusted at December 31, the end of the fiscal year, the following balances were taken from the ledger of Automation Services: Fees Earned $614,500 Dividends 45,000 Rent Expense 140,000 Retained Earnings 3,250,000 Supplies Expense 18,200 Wages Expense 320,000 Miscellaneous Expense 8,700

Journalize the closing entries.

Answer 1

Answer and Explanation:

The journal entries are shown below:

1 Fees Earned $614,500

To Income Summary A/c $614,500

(Being the closing of revenue accounts is recorded)

2

Income Summary A/c $486,900

To Rent Expenses A/c $140,000

To Supplies Expense A/c $18,200

To Wages Expenses A/c $320,000

To Miscellaneous Expenses A/c $8,700

(Being the closing of expenses accounts is recorded)

3

Income Summary A/c $127,600 ($614,500 - $486,900)

To Retained Earnings A/c $127,600

(Being the closing of the income summary is recorded)

4

Retained Earnings A/c $45,000

To Dividends A/c $45,000

[Being the closing of the Dividend account is recorded]