following are accounts and year - end adjusted balances of cruz company as of december 31.\nnumber account…

following are accounts and year - end adjusted balances of cruz company as of december 31.\nnumber account title debit credit\n101 cash \n126 supplies $18,000\n128 prepaid insurance 10,800\n167 equipment 2,000\n168 accumulated depreciation - equipment 23,000\n307 common stock $6,500\n318 retained earnings 12,030\n319 dividends 32,600\n403 services revenue 6,000\n612 depreciation expense - equipment 38,800\n622 salaries expense 2,000\n637 insurance expense 22,620\n640 rent expense 1,630\n652 supplies expense 2,600 1,280\ntotals $89,930 $89,930\ncomplete this questions by entering your answers in the tabs below.\nrequired 1 required 2\nprepare the december 31 closing entries. the account number for income summary is 901.

following are accounts and year - end adjusted balances of cruz company as of december 31.\nnumber account title debit credit\n101 cash \n126 supplies $18,000\n128 prepaid insurance 10,800\n167 equipment 2,000\n168 accumulated depreciation - equipment 23,000\n307 common stock $6,500\n318 retained earnings 12,030\n319 dividends 32,600\n403 services revenue 6,000\n612 depreciation expense - equipment 38,800\n622 salaries expense 2,000\n637 insurance expense 22,620\n640 rent expense 1,630\n652 supplies expense 2,600 1,280\ntotals $89,930 $89,930\ncomplete this questions by entering your answers in the tabs below.\nrequired 1 required 2\nprepare the december 31 closing entries. the account number for income summary is 901.

Answer

Explanation:

Step1: Close revenue account

Debit Services revenue ($38,800) and credit Income Summary (account 901) for the amount of services revenue to transfer revenue to income - summary. Debit: Services revenue $38,800 Credit: Income Summary $38,800

Step2: Close expense accounts

Sum up all expense accounts: Depreciation expense - Equipment ($2,000)+Salaries expense ($22,620)+Insurance expense ($1,630)+Rent expense ($2,600)+Supplies expense ($1,280) = $30,130. Debit Income Summary for $30,130 and credit each expense account for its respective amount to zero - out the expense accounts. Debit: Income Summary $30,130 Credit: Depreciation expense - Equipment $2,000 Credit: Salaries expense $22,620 Credit: Insurance expense $1,630 Credit: Rent expense $2,600 Credit: Supplies expense $1,280

Step3: Close Income Summary account

Calculate the balance of Income Summary: $38,800 (from services revenue) - $30,130 (from expenses)=$8,670. Debit Income Summary for $8,670 and credit Retained earnings for $8,670 to transfer the net income to retained earnings. Debit: Income Summary $8,670 Credit: Retained earnings $8,670

Step4: Close Dividends account

Debit Retained earnings for $6,000 and credit Dividends for $6,000 to zero - out the dividends account. Debit: Retained earnings $6,000 Credit: Dividends $6,000

Answer:

Closing entries:

  1. Debit: Services revenue $38,800 Credit: Income Summary $38,800
  2. Debit: Income Summary $30,130 Credit: Depreciation expense - Equipment $2,000 Credit: Salaries expense $22,620 Credit: Insurance expense $1,630 Credit: Rent expense $2,600 Credit: Supplies expense $1,280
  3. Debit: Income Summary $8,670 Credit: Retained earnings $8,670
  4. Debit: Retained earnings $6,000 Credit: Dividends $6,000