Kimberly Ashley, the bookkeeper for Interiors Designs, has just finished posting the closing entries for the year to the ledger. She is concerned about the following balances: Capital account balance in the general ledger: $194,200 Ending capital balance on the statement of owner’s equity: 111,200 Ashley knows that these amounts should agree and asks for your assistance in reviewing her work. Your review of the general ledger of Interiors Designs reveals a beginning capital balance of $100,000. You also review the general journal for the accounting period and find the closing entries shown below.

1. What errors did Kimberly Ashley make in preparing the closing entries for the period?
2. Prepare a general journal entry to correct the errors made.
3. Explain why the balance of the capital account in the ledger after closing entries have been posted will be the same as the ending capital balance on the statement of owner’s equity.

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DATE 120X1 2 Dec 3 4 5 6 7 8 9 10 11 12 13 14 DESCRIPTION Closing Entries 31 Fees Income Accumulated Depreciation Accounts Payable Income Summary GENERAL JOURNAL 31 Income Summary Salaries Expense Supplies Expense Depreciation Expense Wade Wilson, Drawing POST. REF. DEBIT 196 0 0 0 00 17 000 00 66 0 0 0 00 184 80000 PAGE 15 CREDIT 1 2 3 4 5 6 7 8 156 0 0 0 00 10 000 00 9 4800 00 10 14 0 0 0 0 0 11 279 0 0 0 00 12 13 14