Question

Presented below are selected account balances for Homer Winslow Co as of December 31, 2014.

Instructions: Prepare closing entries for Homer Winslow Co on December 31,2014. (Omit explanations)

Inventory 12/31/14 $60,000 Cost of Goods Sold $225,700

Common Stock 75,000 Selling Expenses 16,000

Retained Earnings 45,000 Administrative

Expenses 38,000

Dividends 18,000 Income Tax

Expense 30,000

Sales Returns

and Allowances 12,000

Sales Discounts 15,000

Sales Revenue 410,000

Answer 1

Sales Revenue 410,000 debit

Income Summary 410,000 credit

--to close revenues accounts--

Income Summary 95,000 debit

Administrative Expenses 38,000 credit

Income Tax Expense 30,000 credit

Sales Returns and Allowances 12,000 credit

Sales Discounts 15,000 credit

--to close expenses and other--

Income Summary 18,000 debit

Dividends 18,000 credit

--to close dividends--

Income summary 297,000 debit

Retained Earnings 297,000 credit

--to close the income summary against RE--

Step-by-step explanation:

We have to close against income summary he temporary accounts:

To close this accounts we need to post them in their opposite side of the normal balance. Revenues will be debited while expenses credited.

At last, we solve for the income summary balance and close it against retained earnings

410,000 - 95,000 - 18,000 = 297,000