4 Office Equipment 60,000.00 40,000.00 6,000.00 8,000.00 5 Accumulated Depreciation Office Equipment Accounts Payable Salaries Payable 8 Income Taxes Payable 9 Common Stock 10 Retained Earnings 11 Totals 4,000.00 2,000.00 Chandler, Inc. 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, 2017, 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 Chart of Accounts CHART OF ACCOUNTS Chandler, Inc. General Ledger ASSETS REVENUE 11 Cash 41 Fees Earned 42 Rent Revenue 43 Interest Revenue 12 Accounts Receivable 15 Prepaid Insurance 18 Office Equipment 19 Accumulated Depreciation Office Equipment EXPENSES LIABILITIES 21 Accounts Payable 23 Salaries Payable 24 Income Taxes Payable 51 Salaries Expense 52 Selling Expense 53 Income Taxes Expense 55 Insurance Expense 56 Depreciation Expense 59 Miscellaneous Expense LIABILITIES 21 Accounts Payable 23 Salaries Payable 24 Income Taxes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary Adjusted Trial Balance Chandler, Inc. ADJUSTED TRIAL BALANCE December 31, 2017 ACCOUNT TITLE DEBIT CREDIT Cash 86,000.00 2 Accounts Receivable 29,000.00 16,000.00 3 Prepaid Insurance 4 Office Equipment 5 Accumulated Depreciation Office Equipment 60,000.00 40,000.00 Accounts Payable 6,000.00 8,000.00 Salaries Payable 8 Income Taxes Payable 4,000.00 Common Stock 2,000.00 Adjusted Trial Balance 10 Retained Earnings 18,000.00 11 Dividends 5,000.00 12 Fees Earned 185,600.00 13 Rent Revenue 92.000,00 14 Interest Revenue 17,200.00 15 Salaries Expense 71.000.00 16 Selling Expense 25,600.00 17 Income Taxes Expense 15,000.00 18 Insurance Expense 17,000.00 19 Depreciation Expense 47,200.00 20 Miscellaneous Expense 1,000.00 21 Totals 372,800.00 372,800.00 The Closing Process 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 the following questions (1)-(3). 1. If a temporary account has an ending balance of $62,000, what is its beginning balance for the following accounting period? 2. If a permanent account has an ending balance of $62,000, what is its beginning balance for the following accounting period? The Closing Process 2. If a permanent account has an ending balance of $62,000, what is its beginning balance for the following accounting period? $62,000 3. Roscoe will be preparing his yearly financial statements after completing Chandler, Inc.'s closing process, and is somewhat confused about the characteristics of the accounts on his Chart of Accounts. He has started by creating the following chart, and asks for your help in completing it. For each account or type of account listed, choose all descriptions that apply. Temporary Permanent Closed to Income Summary Account Account Account Yes No Revenues The Closing Process Closed to Income Summary Permanent Temporary Account Account Account Yes No Revenues Asset accounts Retained Earnings account Expenses Liability accounts Dividends account Roscoe's Journal Roscoe has attempted to journalize the closing entries for Chandler, Inc. on this panel. He's not sure if he's journalized the 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 journalize all four of the closing entries for Chandler, Inc. as of Dec. 31 on the Journal panel. PAGE 25 JOURNAL DATE DESCRIPTION POST. REF. DEBIT ACCOUNTING FOLIATION ASSETS LIABILITIES EQUITY CREDIT Closing Entries Roscoe's Journal Closing Entries Dec. 31 Income Summary 294,800.00 Fees Earned 185,600.00 Rent Revenue 92,000.00 Interest Revenue 17,200.00 31 Income Summary 176,800.00 Salaries Expense 71,000.00 Selling Expense 25,600.00 Income Taxes Expense 15,000.00 Depreciation Expense 47,200.00 I--------- ------ 47nnnnn Income Taxes Expense 15,000.00 Depreciation Expense 47,200.00 17,000.00 Insurance Expense Miscellaneous Expense 1,000.00 31 471,600.00 Retained Earnings Income Summary Retained Earnings 471,600.00 31 5,000.00 Dividends 5,000.00 Post-Closing Trial Balance Chandler, Inc. POST-CLOSING TRIAL BALANCE December 31, 2017 ACCOUNT TITLE CREDIT DEBIT 86,000.00 1 Cash 29,000.00 2 Accounts Receivable 3 Prepaid Insurance 16,000.00 60,000.00 4 Office Equipment 5 Accumulated Depreciation Office Equipment 40,000.00 6,000.00 8,000.00 6 Accounts Payable 7 Salaries Payable & Income Taxes Payable 9 Common Stock 4,000.00 2,000.00