Question

The Retained earnings account has a credit balance of $54,000 before closing entries are made. Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. What is the correct closing entry for the revenue accounts?

Answer 1

The correct closing entry for the revenue accounts is to debit the Retained earnings account by $72,200 and credit the Revenue accounts by $72,200.

Step-by-step explanation:

The correct closing entry for the revenue accounts can be determined by transferring the total revenues to the Retained earnings account. Since the Retained earnings account has a credit balance of $54,000, we need to increase it by the total revenues of $72,200. This can be done by debiting the Retained earnings account by $72,200. The corresponding credit entry will be made to the revenue accounts, which will be a total of $72,200. The closing entry for the revenue accounts is therefore:

Debit Retained earnings: $72,200

Credit Revenue accounts: $72,200

Answer 2

Answer: $62100

Step-by-step explanation:

The following can be deduced from the information given in the question:

Credit balance = $54000

Total revenues = $72,200

Total expenses = $48,300

Dividends = $15,800

Closing entry= Credit balance + Total revenues - (Total expenses + Dividends)

= $54000 + $72,200 - ($48300 + $15800)

= $126200 - $64100

= $62100