Chandler, Inc. is owned by Roscoe Chandler and provides appraisal services to individuals and companies wishing to purchase and sell fine art. Chandler, Inc. began business on January 1, 2016, and is just completing its first year of business. Roscoe asks for your help in completing the accounting cycle for the company by assisting with the closing process.
Before the closing entries are made, you begin with an adjusted trial balance. The closing entries are essentially the link from the adjusted trial balance to the post-closing trial balance.
Chandler, Inc.
ADJUSTED TRIAL BALANCE
December 31, 2016

The final step of the accounting cycle is the closing process. The main goal of this stage of the cycle is to ensure that the balance of each temporary account is returned to zero and that net income is transferred to the retained earnings account. The first step in successfully undertaking the closing process is to understand the difference between a temporary account and a permanent account. Roscoe has some questions about the process.
Answer questions (1) - (3) below.
1. If a temporary account has an ending balance of $57,000, what is its beginning balance for the following accounting period?
2. If a permanent account has an ending balance of $57,000, what is its beginning balance for the following accounting period?
3. Roscoe will be preparing his yearly financial statements after completing Chandler, Inc.'s closing process, and is a somewhat confused about the characteristics of the accounts on his Chart of Accounts. He has started by creating the chart below, and asks for your help in completing it. For each account or type of account listed, choose all descriptions that apply.
Roscoe has attempted to prepare the closing entries for Chandler, Inc. on this panel. He's not sure if he's entered the journal entries correctly, and asks you to review them. You find that two of the entries are correct, but two are incorrect.
Determine which entries are incorrect, and enter all four of the closing entries for Chandler, Inc. as of Dec. 31 on the Journal panel.

Transcribed Image Text:

ACCOUNT TITLE DEBIT CREDIT 1. Cash 76,000.00 2 Accounts Receivable 29,000.00 Prepaid Insurance 16,000.00 Equipment 60,000.00 Accumulated Depreciation-Equipment 40,000.00 Accounts Payable 6,000.00 6. LO Salaries Payable 8,000.00 Income Taxes Payable 4,000.00 Common Stock 2,000.00 10 Retained Earnings 18,000.00 11 Dividends 5,000.00 12 Income Summary 13 Fees Earned 175,600.00