Refer to the Todd McKinney data in Exercise 4-17. After making the adjusting entries in Exercise 4-17,
Question:
Refer to the Todd McKinney data in Exercise 4-17. After making the adjusting entries in Exercise 4-17, journalize McKinney's closing entries at the end of 2007. Also set up T-accounts or four-column accounts for Rent Expense and Service Revenue and post the closing entries to these accounts. What are their balances after closing?
Exercise 4-17
Todd McKinney Magic Shows' records include the following account balances:
During 2007, McKinney recorded the following:
a. Prepaid annual rent of \(\$ 6,000\).
b. Made the year-end adjustment to record rent expense of \(\$ 5,800\) for the year.
c. Collected \(\$ 4,000\) cash in advance for service revenue to be earned later.
d. Made the year-end adjustment to record the earning of \(\$ 4,500\) service revenue that had been collected in advance.
Requirements
1. As directed by your instructor, set up T-accounts or four-column accounts for Prepaid Rent, Rent Expense, Unearned Service Revenue, and Service Revenue. Insert beginning and ending balances for Prepaid Rent and Unearned Service Revenue.
2. Journalize entries a through \(\mathrm{d}\) above, and post to the accounts. Explanations are not required. Ensure that the ending balances for Prepaid Rent and Unearned Service Revenue agree with the December 31, 2007, balances given above.
Step by Step Answer:
