Question

The adjusted trial balance for China Tea Company at December 31, 2018, is presented below:

	Debit			Credit
Cash		12,400
Accounts receivable		169,000
Prepaid rent		6,900
Inventory		44,000
Equipment		490,000
Accumulated depreciation - equipment					144,000
Accounts payable					49,000
Notes payable - due in three months					49,000
Salaries payable					5,900
Interest payable					2,900
Common stock					295,000
Retained earnings					91,800
Sales revenue					590,000
Costs of goods sold		275,000
Salaries expense		139,000
Rent expense		34,000
Depreciation expense		49,000
Interest expense		3,900
Advertising expense		4,400
Totals		1,227,600			1,227,600

Required:
Prepare the closing entries for China Tea Company for the year ended December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

1. Record the entry to close the revenue accounts using the income summary.

2. Record the entry to close the expense accounts using the income summary.

3. Record the entry to close the income summary account.

Event	General Journal	Debit	Credit
1
2
3

Answer 1

Closing Entries:

	General Journal	Debit	Credit
1)	Sales Revenue	$590000
	Income Summary		$590000
2)	Income Summary	$505300
	Cost of goods sold		$275000
	Salaries Expense		$139000
	Rent Expense		$34000
	Depreciation Expense		$49000
	Interest Expense		$3900
	Advertising Expense		$4400
3)	Income Summary	$84700
	Retained Earnings		$84700