Answer:
1. Prepare the journal entries to close your temporary accounts.
the journal entries required to close the temporary accounts are:
December 31, 2019, closing of temporary revenue accounts
Dr Fees earned 136,000
Cr Income summary 136,000
December 31, 2019, closing of temporary expense accounts
Dr Income summary 88,200
Cr Salaries expense 66,000
Cr Rent expense 14,200
Cr Supplies expense 1,600
Cr Depreciation expense 4,000
Cr Utilities expense 2,400
December 31, 2019, closing of temporary income summary account
Dr Income summary 88,200
Cr Retained earnings 88,200
December 31, 2019, closing of drawings account
Dr Retained earnings 10,000
Cr Sean McCann, Drawing 10,000
2. Prepare an income statement and a statement of owner’s equity for the year ended December 31, 2019 and a classified balance sheet as of December 31, 2019.
Sean McCann, CPA
Income Statement
For the Year Ended December 31, 2019
Fees earned $136,000
Salaries expense ($66,000)
Rent expense ($14,200)
Supplies expense ($1,600)
Depreciation expense ($4,000)
Utilities expense ($2,400)
Net income $47,800
retained earnings = net income - drawings = $47,800 - $10,000 = $37,800
Sean McCann, CPA
Balance Sheet
For the Year Ended December 31, 2019
Assets
Current assets:
Cash $33,800
Accounts receivable $28,000
Supplies $7,000
Total current assets $68,800
Non-current assets:
Equipment $130,000
Accumulated dep. (equip)-$32,000
Total non-current assets $98,000
Total assets $166,800
Liabilities and equity
Current liabilities:
Accounts payable $10,600
Salaries payable $6,000
Total current liabilities $16,600
Long term liabilities:
Mortgage payable $6,400
Total long term liabilities: $6,400
Equity
Sean McCann, capital $106,000
Retained earnings $37,800
Total equity $143,800
Total liabilities and equity $166,800
Sean McCann, CPA
Statement of Owner’s Equity
For the Year Ended December 31, 2019
Sean McCann, capital 1/1/19 $106,000
Net income $47,800
Subtotal $153,800
Drawings during the year -$10,000
Sean McCann, capital 1/1/19 $143,800