The following accounts reflect the correct Year 1 year-end balances after adjustment but before closing.
| Accumulated depreciation | 225 | Accounts payable | 52 |
| Accounts receivable | 280 | Cash | 76 |
| Common stock | 100 | Cost of goods sold | 420 |
| Depreciation expense | 60 | Dividends | 20 |
| Equipment | 600 | Interest expense | 4 |
| Inventory | 90 | Note payable, due 8/1/Y4 | 63 |
| Prepaid rent | 10 | Rent expense | 40 |
| Retained earnings, 1/1/Y1 | 400 | Salary expense | 125 |
| Sales revenue | 855 | Unearned revenue | 30 |
4. Closing the Income Summary Accounts:
Step 1: Close revenue and expenses to Income Summary
| Income Summary | |||
|---|---|---|---|
| Depreciation Expense | 60 | ||
| 855 | Sales Revenue | ||
| COGS | 420 | ||
| Interest Expense | 4 | ||
| Rent | 40 | ||
| Salary Expense | 125 | ||
| 206 | Net Income | ||
Step 2: Close Income Summary and Dividends to RE
| Retained Earnings | |||
|---|---|---|---|
| 400 | Opening Balance | ||
| 206 | Income Summary | ||
| Dividends | 20 | ||
| 586 | Ending Balance | ||
| Click Here to View All Topic 4 Problems at Once | View | ||
| 1 | Adjusting Entry Identification | Easy | |
| 2 | Revenue Recognition | Easy | |
| 3 | Closing Journal Accounts | Easy | |
| 4 | Revenue Recognition | Easy | |
| 5 | Revenue Journal Entry | Easy | |
| 6 | Adjusting Entry - Salaries Payable | Moderate | |
| 7 | Adjusting Entry - Wage Expense | Moderate | |
| 8 | Revenue Recognition | Moderate | |
| 9 | Prepaid Rent | Moderate | |
| 10 | Determining Net Income From Transactions | Moderate | |
| 11 | Determining Net Income From Journal Entries | Moderate | |
| 12 | Closing Process | Moderate | |
| 13 | Adjusting Journal Entries | Hard | |
| 14 | Adjusting Journal Entries | Hard | |
| 15 | Revenue and Expense Recognition | Hard | |
| 16 | The Effect of Transactions | Hard | |
| 17 | When You Forget to do Adjusting Entries | Hard | |
| 18 |
Year End Closing & Account Classification
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Hard |
| 1 | Cash vs. Accrual Accounting | 7:21 | |
| 2 | Expense Recognition | 8:07 | |
| 3 | Accruals and Deferrals | 15:07 | |
| 4 | What is an Adjusting Entry? | 4:11 | |
| 5 | Adjusting Entry: Supplies | 1:54 | |
| 6 | Adjusting Entry: Wages | 4:52 | |
| 7 | Adjusting Entry: Unearned Revenue | 2:11 | |
| 8 | Adjusting Entry: Interest | 2:03 | |
| 9 | Contra-accounts | 4:40 | |
| 10 | Depreciation | 7:10 | |
| 11 | The Closing Process | 10:37 |