Question

Below is an adjusted trial balance from Husky Iron Works located in Huntsville, Ontario.

Husky Iron Works

Trial Balance

December 31, 2016

	Debit	Credit
Cash	$6,200
Accounts receivable	57,000
Inventory	354,800
Prepaid rent	28,000
Equipment	108,000
Accumulated amortization—equipment		$48,200
Accounts payable		43,200
Salary payable		5,000
Interest payable		1,200
Note payable, long-term		87,000
J. Marvin, capital		270,000
J. Marvin, withdrawals	153,000
Sales revenue		766,200
Cost of goods sold	328,000
Salary expense	123,600
Rent expense	44,000
Amortization expense—equipment	5,000
Insurance expense	13,200
Total	$1,220,800	$1,220,800

Required: Prepare closing entries for Husky Iron Works using this adjusted trial balance.

Answer 1

Closing entries from Trial Balance:-

31 December 2016 Revenue $7,66,200 To cost of goods sold $3,28,000 To Salary expense $1,23,600 To Rent expense $44,000 To Amortization expense $5,000 To Insurance expense $13,200 To J. Marvin capital $2,52,400 ( being closing entries done on year end )

* As revenues and expense difference comes out $2,52,400 i.e. net income.

31 December 2016 J. Marvin Capital $1,53,000 To J. Marvin withdrawel $1,53,000 ( being closing entry made for withdrawel )