Question

PART IV – COMPLETE THE FOLLOWING PROBLEM SET OUT IN FIVE PARTS, NUMBERED 16-20. You should show all of your work to receive full and/or partial credit.

Stan Purple hires you to be his accountant for his SAT Preparatory business. His business prepares high school students to better perform on the SAT.

At year end you find that the SAT Preparatory business has the following Adjusted Trial Balance:

Debit Credit

Cash$11,000

A/R$ 2,500

Loan Payable $10,000   

Stan Green Capital $ 1,000

Withdrawals $ 2,500

Service Revenue $14,000

Wage Expense $ 4,500

Rent Expense $ 2,600

Office Supplies Expense$ 400

Telephone Expense $ 1,500

_______ _______

$25,000 $25,000

16. Prepared the closing entry to close out the Revenue Account.

17. Prepare the closing entry or entries to close out the Expense Accounts.

18. Prepare the closing entry to close out the Income Summary Account.

19. Prepare the closing entry to close out the Withdrawals Account.

20. Prepare the Statement of Owners Equity.

Answer 1

Closing Entries
Events	Particulars			Debit	Credit
16)	Service Revenue			$ 14,000.00
	To Income Summary				$ 14,000.00
17)	Income Summary			$   9,000.00
	To Wage Expense				$   4,500.00
	To Rent Expense				$   2,600.00
	To Office Supplies Expense				$      400.00
	To Telephone Expense				$   1,500.00
18)	Income Summary			$   5,000.00
	To Stan Green Capital				$   5,000.00
19)	Stan Green Capital			$   2,500.00
	To Withdrawals				$   2,500.00

20)	Statement of Owner's Equity
	Beginning Balance			$ 1,000.00
Add:	Net Income		$ 5,000.00
Less:	Drawings		$ 2,500.00	$ 2,500.00
	Ending Balance			$ 3,500.00