Q22E Selected accounts for Kebby Phot... [FREE SOLUTION]

Chapter 4: Q22E (page 225)

Selected accounts for Kebby Photography at December 31, 2018, follow: Salaries Expense 31,800 1,400 2,700 Supplies Expense 7,000 1,500 Depreciation Expense鈥擝uilding Depreciation Expense鈥擣urniture Dividends 14,000 Service Revenue 33,000 4,500 Retained Earnings 49,000 Requirements 1. Journalize Kebby Photography鈥檚 closing entries at December 31, 2018. 2. Determine Kebby Photography鈥檚 ending Retained Earnings balance at December 31, 2018.

Expert verified

(1) Closing entries are as follows:

Date	Accounts and Explanation	Debit	Credit
Dec. 31	Service Revenue	$37,500
	Income Summary		$37,500
	To close revenue.

Dec. 31	Income Summary	$44,400
	Salaries Expense		$33,200
	Supplies Expense		$2,700
	Depreciation Expense鈥擝uilding		$7,000
	Depreciation Expense鈥擣urniture		$1,500
	To close expenses.

Dec. 31	Retained Earnings	$6,900
	Income Summary		$6,900
	To close Income Summary

Dec. 31	Retained Earnings	$14,000
	Dividends		$14,000
	To close Dividends

(2) Ending balance of retained earnings equals to $28,100.

Net loss is calculated as follows:

$\begin{array}{rcl} NetLoss & = & TotalRevenues - TotalExpenses \\ = & $ 37, 500 - $ 44, 400 \\ = & $ (6, 900) \end{array}$

Ending balance of retained earnings is calculated as follows:

$\begin{array}{rcl} EndingBalance & = & BeginningBalance - NetLoss - Dividends \\ = & $ 49, 000 - $ 6, 900 - $ 14, 000 \\ = & $ 28, 100 \end{array}$

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