The following accounts are taken from the December 31, 2011 financial statements
ID: 2387205 • Letter: T
Question
The following accounts are taken from the December 31, 2011 financial statements of a company.Accounts payable
$2,075
Accounts receivable
800
Selling & administrative expenses
2,500
Cash
2,200
Contributed Capital
2,000
Dividends
1,900
Income tax expense
400
Interest expense
75
Other expenses
500
Notes payable
5,000
Other assets
2,500
Other liabilities
3,000
Other operating expenses
2,000
Other revenue
300
Property & equipment
11,000
Retained earnings as of 12/31/10
4,800
Salaries expense
3,000
Supplies
300
Service revenue
10,000
Required:
1. Determine 2011 Net income; Total Assets at 12/31/2011 and Total Liabilities at 12/31/2011.
2. Prepare the 2011 closing journal entries for this company.
3. Determine retained earnings at 12/31/2011.
Explanation / Answer
1. Determine 2011 Net income; Total Assets at 12/31/2011 and Total Liabilities at 12/31/2011. Revenues Service revenue 10,000 Other revenue 300 Less Expenses Selling & administrative expenses 2,500 Income tax expense 400 Interest expense 75 Other expenses 500 Other operating expenses 2,000 Salaries expense 3,000 Net Income = 1,825 Assets Accounts receivable 800 Cash 2,200 Other assets 2,500 Property & equipment 11,000 Supplies 300 Total Assets = 16.800 Liabilities Accounts payable $2,075 Notes payable 5,000 Other liabilities 3,000 Total Liabilities = 10,075 2. Prepare the 2011 closing journal entries for this company. For each of the expenses, debit Income Summary and credit the expense account for each separate amount. For each of the revenues, debit the revenue account and credit Income Summary for each separate amount. After totaling the Income Summary account, debit Income Summary and credit Retained Earnings for the Income Summary amount. For dividends, debit Retained Earnings and credit Dividends. For Contributed Capital, debit Contributed Capital and credit Retained Earnings 3. Determine retained earnings at 12/31/2011 Retained earnings as of 12/31/10 4,800 Contributed Capital 2,000 Net Income 1,825 Less: Dividends 1,900 = 6,725 retained earnings at 12/31/2011