1) Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $197,000, expenses of $109,700, and the company paid $22,800 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $309,000. The ending retained earnings balance after closing is:

$87,300.

$64,500.

$197,000.

$396,300.

$373,500.

2) On August 1, a company paid the $3,900 premium on a one-year insurance policy with benefits beginning on that date. The company debited Prepaid Insurance at the time of the cash payment. Assuming no previous adjustments have been made for the expired insurance, the correct adjusting entry on December 31 would be:

Insurance Expense	1,625
Prepaid Insurance		1,625

Insurance Expense	3,900
Cash		3,900

Prepaid Insurance	2,275
Insurance Expense		2,275

Insurance Expense	3,900
Prepaid Insurance		3,900

Prepaid Insurance	2,275
Cash		2,275

3) A company had revenues of $58,500 and expenses of $45,500 for the accounting period. The company paid $6,450 cash in dividends to the owner (sole shareholder). Which of the following entries could not be a closing entry?

Debit Retained Earnings $6,450; credit Dividends $6,450

Debit Income Summary $58,500; credit Revenues $58,500

Debit Revenues $58,500; credit Income Summary $58,500

Debit Income Summary $45,500; credit Expenses $45,500

Debit Income Summary $13,000; credit Retained Earnings $13,000