on january 1, grand rapids consulting inc. had a retained earnings balance of $46,200 and reported the…

on january 1, grand rapids consulting inc. had a retained earnings balance of $46,200 and reported the following accounts and balances at year - end: sales revenue $162,220 salaries expense 91,660 rent expense 10,750 utilities expense 8,415 supplies expense 4,348 income taxes expense 13,800 dividends (declared and paid) 8,400 required: 1. prepare the closing entries made by grand rapids consulting at december 31. if an amount box does not require an entry, leave it blank. december 31 december 31

on january 1, grand rapids consulting inc. had a retained earnings balance of $46,200 and reported the following accounts and balances at year - end: sales revenue $162,220 salaries expense 91,660 rent expense 10,750 utilities expense 8,415 supplies expense 4,348 income taxes expense 13,800 dividends (declared and paid) 8,400 required: 1. prepare the closing entries made by grand rapids consulting at december 31. if an amount box does not require an entry, leave it blank. december 31 december 31

Answer

Explanation:

Step1: Close revenue account

Debit Sales Revenue for its balance of $162,220 and credit Income Summary for the same amount to transfer revenue to the Income - Summary account. Debit: Sales Revenue $162,220 Credit: Income Summary $162,220

Step2: Close expense accounts

Sum up all expenses: Salaries Expense ($91,660)+Rent Expense ($10,750)+Utilities Expense ($8,415)+Supplies Expense ($4,348)+Income Taxes Expense ($13,800) = $128,973. Debit Income Summary for $128,973 and credit each expense account for its respective balance. Debit: Income Summary $128,973 Credit: Salaries Expense $91,660 Credit: Rent Expense $10,750 Credit: Utilities Expense $8,415 Credit: Supplies Expense $4,348 Credit: Income Taxes Expense $13,800

Step3: Close Income - Summary account

The balance in Income Summary is $162,220 - $128,973=$33,247 (credit balance). Debit Income Summary for $33,247 and credit Retained Earnings for $33,247. Debit: Income Summary $33,247 Credit: Retained Earnings $33,247

Step4: Close Dividends account

Debit Retained Earnings for the dividends amount of $8,400 and credit Dividends for $8,400. Debit: Retained Earnings $8,400 Credit: Dividends $8,400

Answer:

December 31 Debit: Sales Revenue $162,220 Credit: Income Summary $162,220

December 31 Debit: Income Summary $128,973 Credit: Salaries Expense $91,660 Credit: Rent Expense $10,750 Credit: Utilities Expense $8,415 Credit: Supplies Expense $4,348 Credit: Income Taxes Expense $13,800

December 31 Debit: Income Summary $33,247 Credit: Retained Earnings $33,247

December 31 Debit: Retained Earnings $8,400 Credit: Dividends $8,400