Question

On December 31, 2016, Ditka Inc. had Retained Earnings of $272,800 before its closing entries were prepared and posted. During 2016, the company had service revenue of $173,100 and interest revenue of $83,800. The company used supplies in the amount of $90,400, advertising expenses were $16,900, salaries and wages totaled $19,050, and income tax expense was calculated as $14,700. During the year, the company declared and paid dividends of $6,500.

Required:

a.	Prepare the closing entries dated December 31, 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

b.	Prepare T-account for the Retained Earnings account.

Answer 1

a) Closing entries

No	General Journal	Debit	Credit
a	Service revenue	173100
	Interest revenue	83800
	Income summary		256900
b	Income summary	141050
	Supplies expense		90400
	Advertising expense		16900
	Salaries and wages expense		19050
	Income tax expense		14700
c	Income summary	115850
	Retained earnings		115850
d	Retained earnings	6500
	Dividend		6500

T account

Dividend paid	6500	Beg Bal	272800
		Net income	115850
		End Bal	382150