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Chapter 3: Q.3-16E (page 135)

Question: E3-16 (L05) (Closing Entries for a Corporation) Presented below are selected account balances for Homer Winslow Co. as of December 31, 2017.

Inventory 12/31/17 \(60,000 Cost of Goods Sold \)225,700

Common Stock \(75,000 Selling Expenses \)16,000

Retained Earnings \(45,000 Administrative Expenses \)38,000

Dividends \(18,000 Income Tax Expenses \)30,000

Sales Returns and

Allowances \(12,000

Sales Discounts \)15,000

Sales Revenue $410,000

Instructions:

Prepare closing entries for Homer Winslow Co. on December 31,2017. (Omit explanations)

Short Answer

Expert verified

Answer:

The amount of income summary expenses is $336,700.

Step by step solution

01

Meaning of Journal entry

The journal entry is the act of keeping a record of any transactions and events either economic or non-economic. The recording of journal entry, includes Serial number or transaction number, Date, Accounts titles and explanations, debit and credit, and narrations.

02

Closing Entries for Homer Winslow co. on December 31, 2017

Date

Account Titles and Explanations

Debit

Credit

Dec 31, 2017

Sales Revenue

$410,000

Income Summary

$410,000

Dec 31, 2017

Income Summary

$336,700

Cost of Goods Sold

$225,700

Sales returns and allowances

$12,000

Sales Discounts

$15,000

Selling Expenses

$16,000

Administrative Expenses

$38,000

Income Tax Expenses

$30,000

Dec 31, 2017

Income Summary

$73,300

Retained Earnings

$73,300

Dec 31, 2017

Retained Earnings

$18,000

Dividends

$18,000

Working notes:

Dec 31: Sales revenue = $410,000 (Given)

Dec 31: Income Summary for expenses

= ($225,700 + $12,000 + $15,000 + $16,000 + $38,000 + $30,000)

= $336,700

Dec 31: Retained Earnings = ($410,000 - $336,700) = $73,300

Dec 31: Dividends = $18,000 (Given)

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Most popular questions from this chapter

The accounts listed below appeared in the December 31 trial balance of the Savard Theater.

Debit

Credit

Equipment

\(192,000

Accumulated Depreciation鈥擡quipment

\) 60,000

Notes Payable

90,000

Admissions Revenue

380,000

Advertising Expense

13,680

Salaries and Wages Expense

57,600

Interest Expense

1,400

Instructions

  1. From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations.)
    1. The equipment has an estimated life of 16 years and a salvage value of \(24,000 at the end of that time. (Use straightline method.)
    2. The note payable is a 90-day note given to the bank October 20 and bearing interest at 8%. (Use 360 days for denominator.)
    3. In December, 2,000 coupon admission books were sold at \)30 each and recorded as Admissions Revenue. They could be used for admission any time after January 1.
    4. Advertising expense paid in advance and included in Advertising Expense \(1,100.
    5. Salaries and wages accrued but unpaid \)4,700.
  2. What amounts should be shown for each of the following on the income statement for the year?
    1. Interest expense.
    2. Admissions revenue.
    3. Advertising expense.
    4. Salaries and wages expense.

BE3-9 (L03) Prepare the following adjusting entries at August 31 for Walgreens. (a) Interest on notes payable of \(300 is accrued. (b) Services performed but unbilled total \)1,400. (c) Salaries and wages earned by employees of \(700 have not been recorded. (d) Bad debt expense for year is \)900. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, Salaries and Wages Payable, Allowance for Doubtful Accounts, and Bad Debt Expense.

Is it necessary that a trial balance be taken periodically? What purpose does it serve?

What are adjusting entries and why are they necessary?

Question: What are reversing entries, and why are they used?
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