Question

Presented below are selected account balances for Sunland Co. as of December 31, 2020.

Inventory 12/31/20 $59,550 Cost of Goods Sold $222,005
Common Stock 76,250 Selling Expenses 15,964
Retained Earnings 44,780 Administrative Expenses 37,422
Dividends 18,160 Income Tax Expense 30,070
Sales Returns and Allowances 11,865 Sales Discounts 15,140
Sales Revenue 405,210

Required:
Prepare closing entries for Homer Winslow Co. on December 31, 2020.

Answer 1

Answer and Explanation:

The closing entries are as follows

1. Sales Revenue A/c Dr $405,210

To Income Summary $405,210

(Being revenue account closed)

2. Income summary A/c Dr $332,466

To Cost of Goods Sold $222,005

To Selling Expenses 15,964

To Administrative Expenses $37,422

To Income Tax Expense 30,070

To Sales Returns and Allowances 11,865

To Sales Discounts 15,140

(Being expenses accounts are closed)

3. Income summary A/c Dr $72,744

To Retained earning $72,744

(Being the difference is credited to retained earning)

4. Retained earnings A/c Dr $18,160

To Dividend A/c $18,160

(Being dividend account is closed)