P3-67A. (Learning Objective 5: Closing the books; evaluating retained earnings) The accounts of Bay View Services, Inc., at June 30, 20X6, are listed in alphabetical order.

Requirements 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Bay View’s closing entries at June 30, 20X6.
2. Set up a T-account for Retained Earnings and post to that account. Then compute Bay View’s net income for the year ended June 30, 20X6. What is the ending balance of Retained Earnings?
3. Did Retained Earnings increase or decrease during the year? What caused the increase or the decrease?

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Accounts payable.......... $ 14,400 Note payable, long term........ $ 6,000 Accounts receivable... 16,100 Other assets.............. 14,400 Accumulated depreciation- Prepaid expenses... 6,000 equipment......... 6,900 Retained earnings, Advertising expense........... 10,500 June 30, 20X5.............. 21,000 Cash......... 7,900 Salary expense....................... 17,600 Current portion of note Salary payable.... 2,700 payable... 1,000 Service revenue.... 95,400 Depreciation expense.... 1,800 Share capital.. 6,600 Dividends... 21,200 Supplies....... 3,900 Equipment.... 51,600 Supplies expense.... 4,500 Interest expense.... 800 Unearned service revenue...... 2,800