← Back to Chapter 4




Hide All Solutions Show All Solutions











Refresh

Closing Journal Accounts Chapter 4

Which account would not appear in a closing journal entry?

  1. Depreciation expense
  2. Cost of Goods Sold
  3. Rent receivable
  4. Dividends
  5. Service revenue

Current Assets Chapter 4

The Kelly Company purchased a building for $75,000 in cash. What is the effect on current assets?

  1. Increase in current assets
  2. Decrease in current assets
  3. No effect on current assets
  4. Unable to determine

Closing Process Chapter 4

After the closing process is complete, which of the following is false?

  1. All accounts with a non-zero balance will be shown on the balance sheet.
  2. The net income or net loss and the dividends for the period have been transferred to the retained earnings account
  3. All temporary accounts have a zero balance
  4. None of the above are false

Account Classifications Chapter 4

Accounts payable $12,000 Accounts Receivable 20,900
Furniture 5,000 Accumulated Depreciation 6,500
Building 82,000 Cash 21,500
Common Stock ? Sales Revenue 90,700
Cost of Goods Sold 51,500 Depreciation Expense 1,450
Dividends 6,600 Note Payable (due 3/1 Year 4) 20,000
Marketable Securities 1,400 Prepaid Expenses 18,000
Salaries Payable 2,800 Land 38,000
Note Payable (due 5/30 Year 2) 12,400 Service Revenue 22,550
Retained Earnings (1/1 Year 1 ) 39,700 Salary Expense 18,000
Accrued Expenses Payable 1,500 Unearned Revenue 30,500
Utilities Expense 5,400
  1. Determine Total assets on December 31, Year 1
  2. Determine Current Liabilities on December 31, Year 1
  3. Determine Net Income for the year ended December 31, Year 1
  4. Determine the total amount of Common Stock on December 31, Year 1
  1. Total Assets - 180,300
  2. Current Liabilities - 59,200
  3. Net Income - 36,900
  4. Common Stock - 31,100

Year End Closing & Account Classification Chapter 4

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
  1. Determine total assets
  2. Determine total liabilities
  3. What are retained earnings on the Dec. 31, Year 1 balance sheet?
  4. Prepare the correct entry to close the Income Summary accounts.
1. Total assets - 831
2. Total liabilities - 145
3. What are retained earnings on the Dec. 31, Year 1 balance sheet? - 586

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