Journalize the closing entries at the end of the vear. Set up a T-account for Retained Earnings and post to that account. Does the T-account balance agree with the Retained Eamings balance in the balance sheet?

Debit Company

Adjusted Trial Balance December 31, 2020

Cash $6,500

Accounts receivable 8,000

Supplies 1,000

Prepaid Rent (3 months) 2,500 Equipment, net 42,000
Accounts payable		$4,000
Salary payable		2,000
Unearned revenue (2 month advance)		2,000
Note payable long term		14,000
Common stock		10,ooo
Retained earnings		14,700
Dividends	4000
Service revenue		75,000
Salary expense	40,000
Rent expense	10,ooo
Supplies expense	1,500
Depreciation expense	5,000
Utilities expense	1200
Total	S121.700	$121.700

SOLUTION:

INCOME STATEMENT

for the year ended December 31, 2021

Service Revenue		75000
Less: Expenses
Salary Expense	40000
Rent Expense	10000
Supplies Expense	1500
Depreciation Expense	5000
Utilities Expense	1200
Total Expenses		57700
Net Income		17300

STATEMENT OF RETAINED EARNINGS

for the year ended December 31, 21

Retained Earnings, Beginning	14700
Add: Net Income	17300
	32000
Less: Dividends	4000
Retained Earnings, Ending	28000

A. Classified Balance Sheet:

BALANCE SHEET

As on Dec 31, 2021

Assets				Liabilities & Stockholder's Equity
Current Assets:				Current Liabilities:
Cash	6500			Account Payable	4000
Account Receivable	8000			Salary Payable	2000
Supplies	1000			Unearned Revenue	2000
Prepaid Rent	2500			Total Current Liabilities	8000
Total Current Assets		18000
				Long term Liabilities:
Non Current Assets:				Notes Payable	14000
Equipment Net		42000		Total Liabilities		22000
				Stockholder's Equity:
				Common Stock	10000
				Retained Earnings	28000
				Total Stockholder's Equity		38000
Total Assets		60000		Total Liabilities & Stockholder's Equity		60000