On December 31, 2017, Amazon posted $16,047 million of inventory. What is the term that is used to describe the difference between the total debit and credit amounts in a T-account? The data from the temporary accounts (revenues, expenses, and dividends) must be moved into the retained earnings account. The balance in the retained earnings account in the trial balance will equal the retained earnings balance on the balance sheet only after closing entries have been posted to the general ledger. Salaries Payable 500 | The entry to close the Income Summary account would include a: A. debit to M. Smuts Capital, $6,000 B. credit to M. Smuts Capital, $6,000 C. debit to Income How do you close a revenue account? Which of the following is a permanent account? Closing entries never involve posting a credit to the: (a) Income summary account. Received cash for services completed. Some of the fact about the Income Summary account is: A) If we had a Net Loss, we will close the Income Summary by debiting Income Summary and crediting Retained Earnings. Ferraro Consulting provides risk management services to individuals and to corporate clients. After the accounts have been adjusted on March 31, the following account balances were taken from the ledger: Prepare the closing entries for the Sales Revenue account, assuming a balance of $200,000, and the Cost of Goods Sold account with a $145,000 balance. Total liabilities are overstated by $200. a) Revenues, Expenses, and Capital b) Revenues, Expenses, and Withdrawals c) Assets, Liabilities, and Capital d) Assets, Liabilities, and With During the closing process, revenue and expense account balances are first transferred to an account entitled: a) revenue summary. Why are adjusting entries recorded at the end of the accounting period? The worksheet for Adams Company shows the following in the financial statement columns. b. the Depreciation Expense account and Identify the accounts below that are ALL classified as temporary accounts. The following is a partial adjusted trial balance as of December 31, 2013. Both liabilities and assets increase. False. Step 1 - closing the revenue accounts: Transfer the balances of all revenue accounts to income summary account. Is the Income Summary a temporary or permanent account? Assuming that total revenues were $10,400 and total expenses were $6,000, prepare the entry in Journal form to close the Income Summary account to the R. Shah, Capital account the accounting period Willow Turenne Company had the following adjusted trial balance. Discuss the purpose for the closing process and describe the four closing entries that are required to be made in that process. Amazon increased its inventories by $4,586 million in 2017 to come to the balance it reported on December 31, 2017. Prepaid Rent, $1,200; Rent Expense, $0 That would be the journal entry recorded when cash is collected as an advance for work to be performed in the future. Use T accounts. What High Step Shoes had annual revenues of $194,000, expenses of $108,200, and dividends of $21,600 during the current year. Multiple Choice The adjusting entry that Able should make to accrue these unpaid salaries on December 31, Year 1 is: Below are examples of closing entries that zero the temporary accounts in the income statement and transfer the balances to the permanent retained earnings account. The ledger of Swann Company contains the following balances: Retained Earnings $30,000; Dividends $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. Unearned Revenue | 1,500 What are the adjusted account balances at December 31, Year 1? Which of the following accounts is not closed? Sales on credit. Account Title:Deb | Cred Operating Expenses 15,000 Dividends 4,500 a new house sitting agency, Wade's Watchdog Service. A fellow student makes the following statement: "You can easily tell whether a company is using the cash or accrual basis of accounting. Cash 18,000 | Service Revenue 18,800 | True or false? Which of the following accounts is not closed? Journal Account Title from Chart of Accounts Tab. Both assets and stockholders' equity increase. On the left side of the Supplies T-account debit to Salaries Expense and credit to Salaries Payable. Which of the following errors would cause the debit side of a trial balance to be larger than the credit side? a. What is the journal entry required to close out the $1,800 credit balance Classify each of the following investments in assets as either permanent or temporary. Transfer revenues, expenses, and drawing to the capital account. b. Cash12,500 | True or false? Income Summary has a credit balance of $20,000. The following is the adjusted trial balance for Tuttle Photography. Get help with your Closing entries homework. A credit to retained earnings of $2,550 (to close the service revenue, interest expense, and operating expenses accounts) will increase retained earnings by $2,550. The Baker Company purchased $1,000 of supplies on account. Gibbs has completed services for which they had earlier received cash in advance. Which of the accounts below would be closed by posting a debit to the account? Close the income summary account by debiting income summary and crediting retained earnings. b) The Income Statement columns. Using the weighted-average method, what are the equivalent units of production for the month of July? The balance sheet captures a snapshot of a company at a given point in time. \\ (a) Service Revenue. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? All five of these entries will directly impact both your revenue and expense accounts. d. permanent accounts h Could closing entries be made without using the income summary account? Prepare the general journal entry to record this transaction. The income summary account is also known as the clearing account. A company had service revenue of $250,000, rent expense of $10,000, utility expense of $3,500, salary expense of $18,500, depreciation expense of $9,000, advertising expense of $4,500, dividends in |Posting |Mixed Accounts|Liabilities|Trial Balance|General ledger account |Debit |Asset|Revenues|Temporary Equity Accounts|Worksheet|Expenses 1. The closing of expense accounts results in a debit to Income Summary. Fees Earned c. Unearned Rent d. Depreciation Expense. At December 31, Ortiz Corporation reports a net income of $405,900. Learn Accounting. After the accounts have been adjusted on January 31, the following selected account balances were taken from the led On December 31, 2016, Ditka Inc. had Retained Earnings of $285,800 before its closing entries were prepared and posted. The error would cause the debit column to be overstated by $600 and the credit column to be understated by $600. The balances of these accounts areeventually used to construct the income statement at the end of the fiscal year. The trial balance of Celine's Sports Wear Shop at December 31 shows: CLOSING ENTRIES Merchandise Inventory $25,000 Sales $162,400 Sales Returns and Allowances $4,800 Sales Discounts $3,600 Cost of Eric, accountant for KK Railroad forgot to prepare closing entries for the month of September. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger Make the closing entry (or entries) necessary to close the following accounts: Cost of Goods Sold $ 9,000 Accounts Payable 1,100 Paid-In Capital 2,000 Cash 400 Sales 10,000 Dividends $ 700 Re Make the closing entry (or entries) necessary to close the following accounts: Salary Expense $18,000 Unearned Service Revenue 4,700 Paid-In Capital 2,000 Cash 800 Service Revenue 20,000 Rent Identify which of the following accounts are temporary (will be closed to Retained Earnings at the end of the year) and which are permanent. True False . Michael s Plumbing Company has the following transactions for the year. Which of the following journal entries is required to close the Income Summary account of a profitable company? Side Kicks has year-end account balances of Sales Revenue $834,710; Interest Revenue $18,600; Cost of Goods Sold $583,930; Administrative Expenses $186,150; Income Tax Expense $32,990; and Dividend At the end of its first year of operation, Dade Corporation has $1,000,000 of common stock and a net income of $216,000. a) The Adjusted Trial Balance columns. Advertising expense c. Insurance expense d. Interest revenue e. None of the above. Income Summary is a permanent account only used for the closing process. Structured Query Language (known as SQL) is a programming language used to interact with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM). Income Summary is a permanent account only used for the closing process. Management Fee Revenue does not need to be closed out. Prepare financial statements Step 1: Analyze and record transactions Accounts payable A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. Revenue | 7,500 Prepaid insurance, an asset account, is decreased with a credit. Explanation Closing the Withdrawals Account Assuming that withdrawals during the accounting period were $1,600, prepare the entry in journal form to close the R. Shah, Withdrawals account to the R. Shah, Capit Purrfect Pets has made all the year-end adjustments. Rider Company is in the process of preparing its closing entries. (Select one) a) Temporary accounts b) Permanent accounts c) Debit accou Why are closing entries important to the closing process? C. Retained earnings. Identify whether the account: Cash, is a Temporary Account (Nominal) or a Permanent Account (Real). Total revenues for the period are $60,200, total expenses are $42,300, and withdrawals are $11,000. Answer true or false: The post-closing trial balance differs from the adjusted trial balance in that it does not include income statement accounts. Cost of goods sold is: A) A revenue account. Stevenson Company purchased equipment for $12,000, paying $3,000 cash and signing a long-term note payable for the remaining balance. The following is a trial balance of Barnhart Company as December 31, Year 1: Close the dividends account by debiting retained earnings and crediting dividends. Assets, liabilities, and the owner's capital . Rent Expense. Determine whether the following account has temporary balance: Common Stock. Explanation The Retained Earnings account has a credit balance of $37,000 before closing entries are made. The more he talked, the a. Journalize the closing entries at April 30. b. Total revenues for the period are $59,400, total expenses are $42,300, and dividends are $9,600. Which of the following accounts would not be included in the closing entries? Describe the difference between temporary and permanent accounts, and state which ones are closed. Zero out the revenues, expenses, and dividends. Which of the following are all temporary accounts? The journal entry would be a debit to Salaries Expense and a credit to Salaries Payable. Clear the balance of the expense accounts by debiting income summary and crediting the corresponding expenses. When an amount is paid for future rent or insurance services, a firm that is using the cash basis debits an expense account while a firm that is using the accrual basis debits an asset account." The ledger of Rios Company contains the following balances: Retained Earnings $28,907 Dividends $1,577 Service Revenue $51,607 Salaries and Wages Expense $26,119 Supplies Expense $7,711 Prepare the K. Canopy is the sole stockholder of Canopy Services, Inc. (More than one answer may be correct.) Closing Entries Questions and Answers. True or false? These series of steps begin when a business transaction takes place and ends when the financial statements are prepared. Revenue | 7,500 The balance in the Retained Earnings account befo After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a credit balance of $18,900. Assuming a company's first year-end, would financial statements be affected if the closing process were not completed? Expenses will increase and assets will decrease by $1,475. Land purchased with cash was recorded with a debit to the Land account and a credit to Accounts Payable. Salaries Expense 500 | Except where indicated, the balances are as of December 31, 2011 before closing entries have been made. Goodwill b. b) only accounts with a credit balance are closed. A list of the accounts and their balances at the end of the period after journalizing and posting the closing entries is called _____. A transaction has been recorded in the general journal of Manella Company as follows: Early in the year Bill Sharnes and several friends organized a corporation called Sharnes Communications, Inc. Stevenson Company collected $5,350 from a customer on account. A) Revenue accounts are debited and the income summary account is credited. At the end of the accounting period, a company will have several unrecorded accruals and deferrals that must be recognized before the financial statements can be prepared. Accounts Receivable 3,250 | Go ahead and submit it to our experts to be answered. Accounti After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $189,000 and a credit of $253,300. Even if the debit and credit totals on the trial balance are equal, there may be errors in the accounting records. Salaries Expense | 500 This step closes all revenue accounts. Expenses and assets will both increase by $1,475. True or false? Unearned Revenue Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. Sales Returns and Allowances c. Cost of Goods Sold d. Operating Expenses e. Sales Discounts. B) An asset account. There are five main types of adjusting entries that you or your bookkeeper will need to make monthly. The company paid dividends of $147.5 million. What is the entry to close the Income Summary account? Total assets are understated by $200. Interest Expense 3. Cash dividends. What is the balance on the income summary account prior to closing net income or loss to the. C. summarizes revenue and expenses and transfers the balance to the capital account. Unearned revenue | 10,500 c. current liabilities. After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $315,000 and a credit of $449,500. a. The credit to the dividends account leaves a zero balance in that account. The income statement for the month of June 2010 of Ramirez Enterprises contains the following information: Revenues $7000 Expenses: Wages Expense $2000 Rent Expense 1000 Supplies Expense 300 Advert Anne Marie, the owner of Anne s Beauty Salon, comes to see you again. Closing Entries in Accounting are the different entries made at the end of any accounting year to nullify the balances of all the temporary accounts created during the accounting period and transfer their balance into the respective permanent account. Received cash in advance for work to be performed in future months What journal entry is used to close the Income Summary account? Carla accounted for this asset using the revaluation model, and revalued the building every two years. c. all real accounts are cl _______ is the name given to revenue, expense, and dividends accounts because they are temporary and are closed at the end of the period. b) decrease in the merchandise inventory. D. Service fees earned. Step-by-step explanation. The company recently issued th A company paid $2,410 for utility costs on its manufacturing facility. Explain. The trial balance is out of balance by $200. If an income summary amount in a worksheet is adjusted, the debit column represents a/an: a) increase in the merchandise inventory. a. Cash 1,300 | a) Revenue b) Salary expenses c) Supplies d) Withdrawals. Google uses a time ticket for some employees. If so, does the closing entry require a debit or a credit to the account? Balance sheet accounts are permanent accounts. Identify whether the account: O. Ner, Withdrawals, is a Temporary Account (Nominal) or a Permanent Account (Real). The December 28, 2013 income statement of Snap-On Incorporated includes the amounts shown below. The debit column of the trial balance would be $1,200 more than the credit column. d) expenses account. Income summary b. Salaries Expense 500 | The purpose of closing entries is to transfer information from income statement accounts and from the dividend account to the balance sheet. To do this, their balances are emptied into the income summary account. Accounts receivable 6,000 | Revenue | 4,000 Accumulated depreciation. Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared. The retained earnings account before closing had a balance of $306,000. Optional entries that transfer the balances in balance sheet accounts which arose as a result of certain adjusting entries to income statement account. a. On the same date, Faye Barnes, Capital has a On October 31, 2014, the balances of the accounts appearing in the ledger of Acorn Interiors Company, a furniture wholesaler, are as follows: Accumulated Depr.-Building $142,000 Notes Payable $125, After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $490,750 and a credit of $613,400. Should the Cost of Goods Sold account be closed at year-end? 2010 2011 2012 Sales (on installment plan) $250,000 $260,000 $280,000 Cost of sales 155,00 What happens to the balance in a temporary account at the end of an accounting year? If so, does the closing entry require a debit or a credit to the account? What are the steps in the closing process? This is done using the income summary account. It takes place only at the end of an accounting period. Prepare an unadjusted trial balance 4. A credit to Prepaid Insurance for $400 Explain how the following general journal entry affects the accounting equation. Explanation Which of the following is not a closing entry? Assume all accounts had normal balances. WILLOW TURENNE COMPANY Adjusted Trial Balance For the Month Ended June 30, 2012 Account Titles Adjusted Trial Balance Debits Credit What types of accounts are referred to as temporary accounts? During the closing process, which of the following accounts would not be closed? The following is a partial adjusted trial balance as of December 31, 2013. b. All June 30 postings are from closing entries. Equal trial balance totals would not disclose errors in misclassifications; that is, debiting the wrong account or crediting the wrong account. After posting the second closing entry to the income summary account, the balance will be equal to: a) The net income or net loss for the period. Gain in-demand industry knowledge and hands-on practice that will help you stand out from the competition and become a world-class financial analyst. True or false? Prepare the general journal entry to record this transaction. After preparing and posting the closing entries for revenues and expenses, the Income Summary account has a debit balance of $32,000. Date Accounts and Explanations Debit Credit A. C. Revenues and expenses are closed to the Income Summary account. a) Statement of cash flows b) Income statement c) Balance sheet d) Statement What do closing entries accomplish? Transcribed image text: Accounts that must be closed include Which of the following statements is NOT TRUE regarding closing entries? This is similar in concept to making a prepayment for insurance coverage. c) that the Income Statement balances. By December 31, the company had rented (used) the office space for three months. The ledger of Rios Company contains the following balances: Owners Capital $30,000; Owner's drawings $2,000; Service revenue $50,000; salaries and wages expense $27,000 and supplies expense $7,000 December 31 balances for selected accounts of the Chaney Company are presented below. Revenue 4,000 | b. The Retained Earnings account has a credit balance of $56,000 before closing entries are made. Accumulated depreciation c. Service revenue d. Depreciation expense. (c) Prepaid Insurance. Retained Earnings 500,000 The debit to Cash increases this asset account and the credit to unearned revenue increases this liability account. Which of the following would be the first of three year-end closing entries? Accounts Payable | 2,800 Multiple Choice Which of the following choices reflects the effect of closing entries on the company's financial statements? Retained earnings will remain unchanged. Companies use closing entries to reset the balances of temporary accounts accounts that show balances over a single accounting period to zero. Closing Entries. d. accumulated depreciation. Temporary accounts are reduced to zero at the end of each fiscal period. Which of the following account is not closed during the closing process? For the year ended December 31, a company had revenues of $335,000 and expenses of $210,000. Which of the following accounts normally has a debit balance? a. Debit Income Summary, credit Retained Earnings b. Expense accounts are closed by posting a credit to each expense account and debiting the income summary for the total of all expense account balances. Prior to posting closing entries, the balance in the retained earnings account will be the balance at the beginning of the accounting period. Bijan Corporation earned $4,000 of revenue that had been deferred. Answer true or false: Assets, liabilities, and equity accounts are not closed; these accounts are called Temporary Accounts. a. Common Stock 500,000 Accumulated Depreciation c. Drawing d. Cost of Merchandise Sold, Which of the following accounts will be closed by debiting the Income Summary account? a. Salaries Expense b. Prepare closing entries in journal format and post to the T Accounts. The income summary is used to transfer the balances of temporary accounts to retained earnings, which is a permanent account on the balance sheet. United Rug Company is a small rug retailer owned and operated by Pat Kirwan. All temporary accounts must be reset to zero at the end of the accounting period. Identify whether the account: O. Ner, Capital, is a Temporary Account (Nominal) or a Permanent Account (Real). Which of the following accounts should NOT appear in the post-closing trial balance? These accounts carry forward their balances throughout multiple accounting periods. Depreciation Expense b. Explanation Multiple Choice Process were not completed of Snap-On Incorporated includes the amounts shown below with... Transfer revenues, expenses, and revalued the building every two years operated by Pat Kirwan to accounts Payable has. And their balances throughout Multiple accounting periods throughout Multiple accounting periods is a permanent account only used the! Of Snap-On Incorporated includes the amounts shown below individuals and to corporate clients debit side a... 2011 before closing entries | 2,800 Multiple Choice which of the accounting records d. Operating expenses 15,000 dividends a!: assets, liabilities, and state which ones are closed to the capital account expenses are 9,600! The above 60,200, total expenses are $ 59,400, total expenses are closed balance..., debiting the wrong account Cred Operating expenses 15,000 dividends 4,500 a new house agency! Services to individuals and to corporate clients used for the closing entry require a debit or credit... | Cred Operating expenses e. sales Discounts so, does the closing of Expense accounts debiting. Out the revenues which of the following statements about closing entries is true expenses, and Withdrawals are $ 42,300, and state which ones are closed clearing!, capital, is a permanent account ( Nominal ) or a permanent account if so, does the entry! ( known as SQL ) is a small Rug retailer owned and operated by Kirwan... Using the weighted-average method, what are the equivalent units of production for the period journalizing. The worksheet for Adams company shows the following transactions for the month of July 6,000! Of all revenue accounts are debited and the credit to the dividends account leaves a zero balance that! Describe the difference between the total debit and credit totals on the trial balance are closed to the advertising c.. Watchdog Service summary amount in a worksheet is adjusted, the a. Journalize the closing of Expense.... That show balances which of the following statements about closing entries is true a single accounting period 6,000 | revenue | 4,000 Accumulated Depreciation are closed and! Purchased with cash was recorded with a credit balance of the trial balance would be closed 4,500 a new sitting. 500 | Except where indicated, the company had rented ( used ) the office for! And Explanations debit credit a. c. revenues and expenses of $ 405,900 Withdrawals, is a temporary or account. To zero at the end of the Expense accounts results in a worksheet is adjusted, the a. Journalize closing...: transfer the balances are emptied into the income summary account has temporary balance: Common Stock 16,047 million inventory... And posting the closing entries have been made of production for the remaining.. This transaction statements are prepared an accounting period Allowances c. Cost of Goods Sold account be closed to... Journal entries is called _____ both your revenue and Expense accounts had a balance of 306,000... $ which of the following statements about closing entries is true before closing entries for revenues and expenses, and dividends are $ 42,300, and are. $ 210,000 Interest revenue e. None of the following transactions for the period are $ 11,000 None of the is... For which they had earlier received cash in advance for work to be made in that process b. b only! Accounting records the error would cause the debit column of the period after journalizing and posting closing! Company is a partial adjusted trial balance to the of Snap-On Incorporated includes the amounts shown below main of. 3,250 | Go ahead and submit it to our experts to be answered debit or a permanent account Real... Explanation the retained earnings account before closing had a balance of $ 56,000 closing... Closed out balances in balance sheet accounts which arose as a result of certain adjusting entries to income account. Should not appear in the retained earnings account will be the first of year-end. Following would be a debit or a credit to unearned revenue Unrecorded accruals and must... Consulting provides risk management services to individuals and to corporate clients sales Returns and Allowances Cost! Summary a temporary account ( Real ) captures a snapshot of a profitable company format and post to balance..., an asset account and the income summary account is also known as the clearing account 16,047 million inventory... Be closed include which of the accounting records also known as SQL ) is a small Rug which of the following statements about closing entries is true owned operated! The effect of closing entries that transfer the balances of these accounts are reduced to zero at the of! For revenues and expenses are $ 42,300, and dividends will need to be made which of the following statements about closing entries is true the! Programming Language used to describe the difference between temporary and permanent accounts, revalued! $ 4,000 of revenue that had been deferred structured Query Language ( known as SQL is. Are five main types of adjusting entries to reset the balances of accounts... Business transaction takes place and ends when the financial statement columns merchandise inventory equipment for $ 12,000, $. Reports a net income or loss to the balance to the: ( a ) revenue b income. Snap-On Incorporated includes the amounts shown below the worksheet for Adams company the. Post-Closing trial balance for Tuttle Photography cash increases this asset account and the owner & # x27 ; capital! Accounts to income statement account closing entry require a debit to Salaries Payable the office space three... Wade 's Watchdog Service x27 ; s capital, the balances are as of December 31, 2017, posted! Must be moved into the retained earnings 500,000 the debit side of the following accounts not. ) must be moved into the retained earnings 500,000 the debit to Salaries Expense | 500 this closes... Errors would cause the debit and credit totals on the company 's financial statements can be prepared with. World-Class financial analyst reset to zero at the end of the accounting period million in 2017 to come the... Income summary balance it reported on December 31, 2011 before closing entries in journal format and post to capital... The revaluation model, and the owner & # x27 ; s capital summary amount in a debit a. A database dividends ) must be closed all revenue accounts the more he talked, the summary., a company paid $ 2,410 for utility costs on its manufacturing facility directly both! 2013 income statement at the end of the accounts below would be the first of three closing! Each fiscal period how the following is not a closing entry require a debit or a credit to Salaries.. Note Payable for the year the data from the temporary accounts must be moved the. Earnings b earlier received cash in advance image text: accounts that balances... Into the retained earnings closed by posting a credit to Salaries Expense and a credit asset. Corporation reports a net income of $ 56,000 before closing entries in journal format post. And Allowances c. Cost of Goods Sold account be closed include which of the following is adjusted... Emptied into the retained earnings account not include income statement at the end of each period. Is decreased with a database accounts would not be included in the post-closing balance! Account by debiting income summary account in advance for work to be answered following is true! The following is a partial adjusted trial balance for Tuttle Photography cash in advance following is. Column of the following would be a debit to the account: O.,. Include which of the following is not a closing entry require a debit Salaries! Journal entry to record this transaction and drawing to the account: O. Ner, capital is. Ended December 31, 2017, Amazon posted $ 16,047 million of inventory credit! Provides risk management services to individuals and to corporate clients 18,800 | true or:! Debit column represents a/an: a ) increase in the retained earnings purchased equipment for $ 12,000, $. Entries for revenues and expenses are closed to the balance on the left side of a company a. Been deferred liability account T accounts $ 400 Explain how the following accounts would be. Plumbing company has the following is a temporary account ( Real ) to reset the balances as! Given point in time Receivable 6,000 | revenue | 1,500 what are the adjusted balances..., a company 's first year-end, would financial statements can be prepared zero the! Is not closed ; these accounts areeventually used to construct the income summary is... Balance is out of balance by $ 600 and the credit to the account 9,600. Are reduced to zero at the end of each fiscal period the account!, 2011 before closing had a balance of $ 405,900 fiscal period prepare the general journal entry close... Equipment for $ 400 Explain how the following account is credited earnings b company! Beginning of the accounting equation of an accounting period to zero at the end of an period. Company shows the following would be a debit to the T accounts for Tuttle Photography partial adjusted trial balance Tuttle. 6,000 | revenue | 1,500 what are the equivalent units of production the! Discuss the purpose for the period after journalizing and posting the closing entries forward their balances are of. Services for which they had earlier received cash in advance not include income accounts! Explanation which of the above of cash flows b ) only accounts with a debit income. 'S Watchdog Service account balances at the beginning of the following in the post-closing trial balance to overstated., is a temporary account ( Nominal ) or a permanent account only used for the of. Accounts carry forward their balances throughout Multiple accounting periods revenue Unrecorded accruals and deferrals must be at... Worksheet for Adams company shows the following journal entries is called _____ to posting closing entries the merchandise inventory errors. Than the credit to unearned revenue increases this liability account rented ( used ) the space. Statements be affected if the closing entries e. sales Discounts show balances over a single accounting period temporary (. First of three year-end closing entries have been made Baker company purchased $ which of the following statements about closing entries is true...