James and Susan Morley recently converted a large turn-of-the-century house into a hotel and incorporated the business as Saginaw Enterprises. Their accountant is inexperienced and has made the following closing entries at the end of Saginaws first year of operations:

PAGE 1

GENERAL JOURNAL

IMPACT ON FINANCIAL STATEMENTS

INCOME STATEMENT

BALANCE SHEET

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY	REVENUE	EXPENSES	NET INCOME
1		Closing Entries
2	Dec. 31	Income Summary		210,000.00
3		Service Revenue			177,000.00
4		Accumulated Depreciation			33,000.00
5	31	Depreciation Expense		33,000.00
6		Income Taxes Expense		8,200.00
7		Utilities Expense		12,700.00
8		Wages Expense		66,000.00
9		Supplies Expense		31,000.00
10		Accounts Payable		4,500.00
11		Income Summary			155,400.00
12	31	Income Summary		54,600.00
13		Retained Earnings			54,600.00
14	31	Dividends		3,200.00
15		Income Summary			3,200.00

Required:

Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct.

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Chart of Accounts

CHART OF ACCOUNTS

James and Susan

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
122	Notes Receivable
123	Supplies
124	Prepaid Insurance
125	Prepaid Rent
126	Inventory
127	Interest Receivable
130	Investment
131	Land
132	Buildings
133	Equipment
134	Furniture
135	Trucks
139	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
212	Notes Payable
213	Income Taxes Payable
214	Wages Payable
215	Utilities Payable
216	Insurance Payable
217	Rent Payable
221	Interest Payable
222	Unearned Service Revenue
223	Unearned Rent Revenue
231	Bonds Payable

	EQUITY
311	Common Stock
321	Retained Earnings
331	Dividends
350	Income Summary

	REVENUE
411	Sales Revenue
412	Service Revenue
413	Interest Income
414	Rent Revenue

	EXPENSES
511	Cost of Goods Sold
512	Advertising Expense
513	Supplies Expense
514	Utilities Expense
515	Rent Expense
516	Insurance Expense
521	Wages Expense
531	Interest Expense
532	Depreciation Expense
541	Income Taxes Expense

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General Journal

Prepare the correct closing entries. Assume that all necessary accounts are presented above and that the amounts given are correct.

General Journal Instructions

Refer to the Chart of Accounts for the exact wording of the account titles.

CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries.

CNOW journals will automatically indent a credit entry when a credit amount is entered.

Select an up or down arrow to show the impact on the financial statements. Be sure to include an arrow in Net Income and Equity when Revenue or Expenses are affected.

PAGE 1

GENERAL JOURNAL

IMPACT ON FINANCIAL STATEMENTS

INCOME STATEMENT

BALANCE SHEET

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY	REVENUE	EXPENSES	NET INCOME
1		Closing Entries
2
3
4
5
6											J