Question

Item 2Item 2 On December 31, 2018, Ditka Inc. had Retained Earnings of $273,800 before its closing entries were prepared and posted. During 2018, the company had service revenue of $174,100 and interest revenue of $84,300. The company used supplies in the amount of $90,900, advertising expenses were $17,000, salaries and wages totaled $19,200, and income tax expense was calculated as $14,900. During the year, the company declared and paid dividends of $6,600. Required: Prepare the closing entries dated December 31, 2018. Prepare T-account for the Retained Earnings account. Enter the beginning balance into the T-account, post the closing entries, and then determine the ending balance.

Answer 1

Closing entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Service revenue				174100
	Interest revenue				84300
	Income Summary					258400
b.	Income Summary				142000
	Supplies expenses					90900
	Advertising expenses					17000
	Salaries and wages expenses					19200
	Income tax expenses					14900
c.	Income Summary				116400
	Retained earnings					116400
d.	Retained earnings				6600
	Dividend account					6600
RETAINED EARNINGS:
Dividend account			6600	Beginning balance		273800
				Income Summary		258400
				Ending balance		525600