Applying the Entire Accounting Cycle

The post-closing trial balance for Wilson Corp., a retailer, at December 31, 2019, follows.

h. Prepare the closing entries, using the Income Summary account to close out revenues and expenses.

Applying the entire Accounting Cycle The post-closing trial balance for Wilson Corp., a retailer, at December 31, 2019, follows. Debit Credit $ 27,000 $ 0 21,000 1,000 35,000 900 50,000 22,500 7,500 Acc. No. Description 101 Cash 102 Accounts receivable 103 Allowance for doubtful accounts 104 Inventory (perpetual inventory system) 105 Prepaid insurance (20 months remaining) 200 Equipment (20-year estimated life, no residual value) 201 Accumulated depreciation-equipment 300 Accounts payable 301 Salaries payable 302 Income taxes payable (for 2019) 400 Common stock, par $1 401 Retained earnings 500 Sales 600 Cost of goods sold 601 Operating expenses 602 Income tax expense 700 Income summary Total 4,000 80,000 18,900 $133,900 $133,900 The following transactions occurred during 2020 in the order shown (use the number at the left in place of a date). 1. Sales revenue was $30,000, of which $10,000 was on credit; the cost, provided using perpetual inventory, was $19,500. 2. Collected $17,000 cash on accounts receivable. 3. Paid $4,000 cash toward income taxes payable (2019). 4. Purchased $40,000 of merchandise, of which $8,000 was on credit. 5. Paid $6,000 cash toward accounts payable. 6. Sales revenue was $72,000 (in cash); cost was $46,800. 7. Paid $19,000 cash in operating expenses. 8. On July 1, 2020, issued 1,000 shares of common stock, par $1, for $1,000 cash. 9. Purchased $100,000 of merchandise, of which $27,000 was on credit. 10. Sales revenue was $98,000, of which $30,000 was on credit; cost, $63,700. 11. Collected $26,000 cash toward accounts receivable. 12. Paid $28,000 cash toward accounts payable. 13. Paid $18,000 cash for various operating expenses. Journal Entries T-Accounts Unadjusted Trial Balance Adjusting Journal Entries T-Accounts after Adjusting Journal Entries Adjusted Trial Balance Financial Statements Closing Journal Entries T-Accounts After Closing Journal Entries Post-Closing Trial Balance h. Prepare the closing entries, using the Income Summary account to close out revenues and expenses. Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the account name. Cr. Dr. 200,000 0 0 200,000 OX General Journal Account Name Sales Income Summary To close out sales revenue. Income Summary Cost of Goods Sold Accumulated Depreciation Accumulated Depreciation To close out expenses. Income Summary Retained Earnings To close out income summary 0 0 0 0 130,000 37,000 x 37,000 x OX 0 0 36,576 x Check