Question

On December 31, 2016, Ditka Inc. had Retained Earnings of $270,800 before its closing entries were prepared and posted. During 2016, the company had service revenue of $171,100 and interest revenue of $82,800. The company used supplies in the amount of $89,400, advertising expenses were $16,700, salaries and wages totaled $18,750, and income tax expense was calculated as $14,300. During the year, the company declared and paid dividends of $6,300.

a.

Prepare the closing entries dated December 31, 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

b. Prepare T-account for the Retained Earnings account.

Answer 1

Solution:

a	Account	Debit	Credit
	Service revenue	171,100
	Interest revenue	82,800
	Income summary		253900
	Income summary	139150
	Supplies expense		89400
	Advertising expense		16700
	Salaries and wages		18750
	Income tax expense		14300
	Income summary	114750
	Retained earnings		114750
b	Retained earnings	6300
	Dividends		6300

　

2)

Retained Earning
		270800	Beginning Balance
12/31/16	6300	114750	12/31/16
		379250	Ending Balance