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Magazine Chapter 4: Q21E (page 224)
The adjusted trial balance of Stone Sign Company follows: Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation鈥擡quipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense鈥擡quipment Supplies Expense Balance \( 15,400 \) 85,500 \( 85,500 100 \) 7,000 3,800 4,300 4,200 800 48,800 17,300 1,400 3,700 1,500 1,400 60,000 300 400 Utilities Expense 600 Total STONE SIGN COMPANY Adjusted Trial Balance January 31, 2018 Requirements 1. Assume Stone Sign Company has a January 31 year-end. Journalize Stone鈥檚 closing entries at January 31. 2. How much net income or net loss did Stone Sign Company earn for the year ended January 31? How can you tell?
Short Answer
(1) Closing entries are as follows:
Date | Accounts and Explanation | Debit | Credit |
Dec. 31 | Service Revenue | $17,300 | |
Income Summary | $17,300 | ||
To close revenue. | |||
Dec. 31 | Income Summary | $6,400 | |
Salaries Expense | $3,700 | ||
Rent Expense | $1,400 | ||
Depreciation Expense鈥擡quipment | $400 | ||
Supplies Expense | $300 | ||
Utilities Expense | $600 | ||
To close expenses. | |||
Dec. 31 | Income Summary | $10,900 | |
Retained Earnings | $10,900 | ||
To close Income Summary | |||
Dec. 31 | Retained Earnings | $800 | |
Dividends | $800 | ||
To close Dividends |
(2) Net income is $10,900 for the year. As total expenses exceed the total revenues, it results in net income.
Step by step solution
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