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Beneish Corporation has the following account balances at December 31, the end of its fiscal year. Debit Credit Cash $ 4,000 Accounts receivable 6,500 Equipment

Beneish Corporation has the following account balances at December 31, the end of its fiscal year.

Debit Credit
Cash $ 4,000
Accounts receivable 6,500
Equipment 78,000
Accumulated depreciation $ 14,000
Notes payable 10,000
Common stock 43,000
Retained earnings 20,600
Dividends 8,000
Service fees earned 71,000
Rent expense 18,000
Salaries expense 37,100
Depreciation expense 7,000
Totals $158,600 $158,600

(a) Prepare Beneish Corporation's income statement and statement of stockholders' equity for year-end December 31, and its balance sheet as of December 31. There were no stock issuances or repurchases during the year. (Do not use negative signs with your answers unless otherwise noted.)

Beneish Corporation

Income Statement

For Year Ended December 31

AnswerCashRetained earningsService fees earnedDividendsNotes Payable Answer
Rent expense
Salaries expense
Depreciation expense
Net income

Note: Use a negative sign for any answer that decreases the balance.

Beneish Corporation

Statement of Stockholders' Equity

For Year Ended December 31

Common Stock Retained Earnings Total Stockholders' Equity
Balance at December 31, Beg
Stock issuance
AnswerCashNotes PayableDividendsRetained earningsService fees earned
Net income
Balance at December 31, End

Note: Use a negative sign with your accumulated depreciation answer.

Beneish Corporation

Balance Sheet

December 31

Assets Liabilities
AnswerRetained earningsService fees earnedCashNotes PayableDividends Answer
Accounts receivable
Equipment, gross
Accumulated depreciation
Equipment, net
Total assets
AnswerCashNotes PayableRetained earningsService fees earnedDividends
Total liabilities
Common stock
AnswerCashDividendsNotes payableService fees earnedRetained earnings
Total liabilities and equity

(b) Prepare journal entries to close Beneish's temporary accounts.

GENERAL JOURNAL
Ref. Description Debit Credit
(1) AnswerRetained EarningsService Fees EarnedStock issuanceCashDividends
AnswerRetained EarningsService Fees EarnedStock issuanceCashDividends
To close revenue account.
(2) AnswerDividendsService Fees EarnedRent ExpenseRetained EarningsStock issuance
AnswerDividendsService Fees EarnedRent ExpenseRetained EarningsStock issuance
To close rent expense account.
(3) AnswerRetained EarningsDividendsSalaries ExpenseStock issuanceService Fees Earned
AnswerRetained EarningsDividendsSalaries ExpenseStock issuanceService Fees Earned
To close salaries expense account.
(4) AnswerStock issuanceRetained EarningsService Fees EarnedDepreciation ExpenseDividends
AnswerStock issuanceRetained EarningsService Fees EarnedDepreciation ExpenseDividends
To close depreciation expense account.
(5) AnswerService Fees EarnedCashRetained EarningsStock issuanceDividends
AnswerService Fees EarnedCashRetained EarningsStock issuanceDividends
To close dividend account.

(c) Set up T-accounts for each account and post the closing entries. Note: Only those ledger accounts affected by closing process are shown here.

  • Enter beginning balances in the appropriate answer box.

  • Enter transactions in the T-accounts in the order they appear, using first available answer box on the appropriate side of the T-account.

  • Compute the ending balances.

Retained Earnings
Beg Bal.
End Bal.

Service Fees Earned
Be g Bal.
End Bal.

Rent Expense
Beg Bal.
End Bal.

Depreciation Expense
Beg Bal.
End Bal.

Salaries Expense
Beg Bal.
End Bal.

Dividends
Beg Bal.
End Bal.

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