Use the following income statement for the year 2014 for Belle Company to prepare entries to close the revenue and expense accounts for the company.

Use the following income statement for the year 2014 for Belle Company to prepare entries to close the revenue and expense accounts for the company.

Service revenue        $85,000

Expenses:

    Salaries and Wages Expense    $40,000

    Rent Expense    12,500

    Advertising Expense        8,700

        Total expenses          61,200

Net income (loss)        $23,800

Solution

Service Revenue        85,000

    Income Summary            85,000

Income Summary        61,200

    Salaries and Wages Expense            40,000

    Rent Expense            12,500

    Advertising Expense            8,700

Sebastien Company earned net income of $44,000 during 2014. The company had owner drawings totalling $20,000 during the period.  Prepare the entries to close Income Summary and the Owner’s Drawings account.

Solution

Income Summary        44,000

    Owner’s Capital            44,000

Owner’s Capital        20,000

    Owner’s Drawings            20,000

At April 1, 2014, Spiderland Company reported a balance of $20,000 in the Owner’s Capital account. Spiderland Company earned revenues of $50,000 and incurred expenses of $32,000 during April 2014. The company had owner drawings of $10,000 during the month.

(a)    Prepare the entries to close Income Summary and  the Owner’s Drawings acccount at April 30, 2014.

(b)    What is the balance in Owner’s Capital on the April 30, 2014 post-closing trial balance?

                                       

Identify which of the following are temporary accounts of Sabrina Company.
(1)    Owner’s Capital
(2)    Owner’s Drawings
(3)    Equipment
(4)    Accumulated Depreciation
(5)    Depreciation Expense

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