Question

The year-end adjusted trial balance of the Timmons Tool and Die Corporation included the following account balances: retained earnings, $310,000; dividends, $48,000; sales revenue, $970,000; cost of goods sold, $670,000; salaries expense, $150,000; rent expense, $47,000; and interest expense, $21,000. Prepare the necessary closing entries.

Answer 1

1. Journal - Closing Entries

Date Account Titles Debit Credit

Sales Revenue $970,000

Income summary $970,000

(Closing of revenue account)

2. Closing the expenses accounts as necessary

Journal - Closing Entries

Date Account Titles Debit Credit

Income summary $888,000

Cost of goods sold $670,000

Salary expenses $150,000

Rent expenses $47,000

Interest expenses $21,000

(Closing of expenses account)

3. Closing net Income

Journal - Closing Entries

Date Account Titles Debit Credit

Income summary $82,000

Retained earning $34,000

Dividends $48,000

(Closing of net income)