Question

The year-end adjusted trial balance of the Timmons Tool and Die Corporation included the following account balances: retained earnings, $235,000; sales revenue, $820,000; cost of goods sold, $520,000; salaries expense, $195,000; rent expense, $43,000; and interest expense, $18,000. Prepare the necessary closing entries.

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

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

Record the entry to close the income summary account.

Answer 1

Income Statement
Revenues:
Sales revenue	820,000
Total revenue	820,000
Expenses:
Cost of good sold	-520,000
Salaries expense	-195,000
Rent expense	-43,000
Interest expense	-18,000
Total expenses	-776,000
Net Income	$44,000

Date	General Journal	Debit	Credit
Year end	Sales revenue	$820,000
	Income Summary		$820,000
	( To close revenues)
Year end	Income Summary	$776,000
	Cost of good sold		$520,000
	Salaries expense		$195,000
	Rent expense		$43,000
	Interest expense		$18,000
	( To close expenses)
Year end	Income Summary	$44,000
	Retained earnings		$44,000
	( To close income summary)

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