Question

Ch 4

Do It! 4-3 (p. 4-42)

DO IT! 4.2 (LO 2) Paloma Company shows the following balances in selected accounts of its adjusted trial balance.

Prepare closing entries.

Supplies		$32,000
Supplies Expense		6,000
Accounts Receivable		12,000
Owner's Drawings		22,000
Owner's Capital		70,000
Service Revenue		108,000
Salaries and Wages Expense		40,000
Utilities Expense		8,000
Rent Expense		18,000

Prepare the closing entries at December 31.

Answer 1

Closing entries

Date	account and explanation	Debit	Credit
Dec 31	Service revenue	108000
	Income summary		1080000
	(To close revenue)
Dec 31	Income summary	72000
	Supplies expense		6000
	Salaries and wages expense		40000
	Utilities expense		8000
	rent expense		18000
	(To close expense)
Dec 31	Income summary	36000
	Owner's capital		36000
	(To close income summary)
Dec 31	Owner's capital	22000
	Owner's Drawing		22000
	(To close withdrawal)