Question

At December 31, 2020, account balances after adjustments for Sky Company are as follows:                           ...

At December 31, 2020, account balances after adjustments for Sky Company are as follows:   

                                                                                        Account Balances

Accounts                                                                       (After Adjustment)

Cash                                                                                     $ 70,000

Supplies                                                                                    10,000

Equipment                                                                              125,000

Accumulated Depreciation—Equipment 30,000

Notes Payable                                                                          42,500                       

Accounts Payable                                                                    12,500

Sky’s Capital                                                                            50,000

Sky’s Drawings                                                                        20,000

Service Revenue                                                                    285,000

Advertising Expense 47,000

Depreciation Expense 10,000

Rent Expense                                                                           65,000

Salaries Expense                                                                      60,000

Maintenance Expense 3,000

Utilities Expense                                                                      10,000

Required:

Prepare the closing journal entries for Sky Company on December 31, 2020.

Business   Accounting   
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Answer #1
Closing Entries
Date Account Titles and Explanation Debit Credit
Dec. 31, 2020 Service Revenue $285,000
   Income Summary $285,000
(To close the revenue accounts)
Dec. 31, 2020 Income Summary $195,000
   Advertising Expense $47,000
   Depreciation Expense $10,000
   Rent Expense $65,000
   Salaries Expense $60,000
   Maintenance Expense $3,000
   Utilities Expense $10,000
(To close the expense accounts)
Dec. 31, 2020 Income Summary ($285,000 - $195,000) $90,000
   Retained Earnings $90,000
(To close the net income to retained earnings)
Dec. 31, 2020 Retained Earnings $20,000
   Sky's Drawings $20,000
(To close the drawings to retained earnings)
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