Question

From the data below for the Sorta Company, prepare the closing entries for the year ended December 31, 20--.

Cash dividends	$105,000
Sales	987,000
Sales returns and allowances	5,200
Interest revenue	3,700
Factory overhead (debit)	205,300
Factory overhead (credit)	205,300
Cost of goods sold	674,200
Wages expense	112,000
Supplies expense	5,300
Depreciation expense—office equipment	4,200
Utilities expense	5,700
Bad debt expense	1,300
Advertising expense	6,300
Interest expense	4,700
Income tax expense	61,950

GENERAL JOURNAL				Page 1
Date		Description	Post Ref.	Debit	Credit

Answer 1

Journal

December 31, 20--	Sales	987,000
	Interest revenue	3,700
	Income summary		990,700
	(To close revenues)
December 31, 20--	Income summary	880,850
	Sales returns and allowances		5,200
	Cost of goods sold		674,200
	Wages expense		112,000
	Supplies expense		5,300
	Depreciation expense—office equipment		4,200
	Utilities expense		5,700
	Bad debt expense		1,300
	Advertising expense		6,300
	Interest expense		4,700
	Income tax expense		61,950
	(To close expense)
December 31, 20--	Income summary	109,850
	Retained earnings		109,850
	(To close net income to Retained earnings)
December 31, 20--	Retained earnings	105,000
	Cash dividends		105,000
	(To close cash dividends)

Net income = Total revenues - Total expenses

= 990,700 - 880,850

= $109,850