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QUESTION 6 Ellis had the following select account balances at year end, 12/31/20. Cash Prepaid Rent                        ...

QUESTION 6

  1. Ellis had the following select account balances at year end, 12/31/20.

    Cash

    Prepaid Rent                        

    50,000

    24,000

    Accumulated Depreciation

    Allowance for Doubtful Accounts                 

    35,000

    2,000

    Sales Revenue

    492,000

    Cost of Goods Sold

    284,000

    Salaries Expense

    80,000

    Accounts Receivable

    12,000

    Unearned Revenue  

    6,000

    Interest Revenue

    4,000

    Gain on Sale of Land

    Retained Earnings (Jan 1)

    8,000

    80,000

    Depreciation Expense

    Dividends

    20,000

    15,000

      

    Which of the following statements is correct regarding the first closing entry that should be made?

    A.

    Retained Earnings is credited for $496,000.
    B.

    Retained Earnings is debited for $496,000.
    C.

    Retained Earnings is debited for $504,000.
    D.

    Retained Earnings is credited for $504,000.
Business   Accounting   
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Answer #1
INCOME STATEMENT
PARTICULARS AMOUNT
SALES 492000
INTEREST REVENUE 4000
GAIN ON SALE OF LAND 8000
TOTAL INCOME 504000
COST OF GOODS SOLD 284000
SALARIES 80000
DEPRECIATION 20000
DIVIDENDS 15000
ALLOWANCE FOR DOUNTFUL DEBT 2000
TOTAL EXPENSE 401000
AS TOTAL CREDIT SIDE OF INCOME STATEMENT IS $ 504000 SO RETAINED
EARININGS IS CREDITED WITH $504000
SO OPTION D RETAINED EARNINS IS CREDITED WITH $504000 IS CORRECT
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