Journalize the closing entries, see the instruction below.
A E G N P C DENT D CRVONT CASH M JOHNSON DRAWING 1,000 O JOHNSON CAPITAL 40,000 40,000 40,000 2,500 1,000 ACCOUNTS PAYABLE 12,000 1.400 13,400 40.000 12.000 1.000 40,000 4 12.000 19,000 36,500 COST OF GOODS SOLD SALES NOTES PAYABLE 15,000 19.000 5.000 19,000 5,000 15,000 2 TRANS ACCOUNTS 5 1 CASH 6 2 CAPITAL 3 INVENTORY ACCOUNTS PAYABLE 9 5 ACCOUNTS RECEIVABLE 10 6 SALES 11 7 COST OF GOODS SOLD 12 8 INVENTORY 13 9 UTILITIES EXPENSE 14 10 CASH 15 11 ADVERTISING EXPENSE 16 12 ACCOUNTS PAYABLE 13 DRAWING 18 14 CASH 19 15 EQUIPMENT 20 16 NOTES PAYABLE ACCOUNTS RECEIVABLE 19,000 5,000 5.000 19,000 2.500 2,500 19,000 ADVERTISING EXPENSE 1.400 1.400 1,400 1.000 INVENTORY 12,000 5,000 1.400 1,000 15.000 7,000 UTILITIES EXPENSE 15,000 2.500 21 17 EQUIPMENT 15,000 22 18 2.500 23 19 24 20 15,000 INCOME SUMMARY 25 21 26 27 22 23 24 28 29 TRANSACTIONS-CLOSING THE ACCOUNTS FOR A NETLOSS The task is to close the accounts. Follow these instructions: 25 30 31 26 27 1 Starting at line 18 of the journal, close the SALES account You will need to debit SALES for its balance, and then credit Income Summary 32 28 33 29 2 Then, debit INCOME SUMMARY for the total of COST OF GOODS SOLD and the expenses, then credit each expense for its balance. You will need 1 debit and 3 credits 34 30 35 36 TRIAL BALANCE DEAT CREDIT At this point your revenues and expenses should have zero balances. Take a look 37 CASH 38 39 36,500 19,000 7,000 15,000 3 Close the income Summary account. Because there is a NET INCOME, we must debit the INCOME SUMMARY account and credit CAPITAL for the net income amount ACCOUNTS RECEIVABLE INVENTORY EQUIPMENT ACCOUNTS PAYABLE NOTES PAYABLE 40 41 42 13,400 15.000 40,000 4 Finally close the Drawing account. This will require a debit to the Capital account and a credit to the Drawing account for the Drawing account balance 43 44 CAPITAL DRAWING 1,000 45 SERVICE REVENUE 19,000 Verify that the Sales Expenses, Income Summary and Drawing accounts are at zero. You can look at the trial balance for this verification. Note also that the Capital account, which started with a balance of $40,000, now has a balance of 349,100 46 47 COST OF GOODS SOLD ADVERTISING EXPENSE UTILITIES EXPENSE 5,000 1.400 2,500 48 49 SO INCOME SUMMARY TOTALS 87,400 87,400 JOURNAL + Ready TRANSACTIONS-CLOSING THE ACCOUNTS FOR A NET LOSS The task is to close the accounts. Follow these instructions: 1 Starting at line 18 of the journal, close the SALES account. You will need to debit SALES for its balance, and then credit Income Summary 2 Then, debit INCOME SUMMARY for the total of COST OF GOODS SOLD and the expenses; then credit each expense for its balance. You will need 1 debit and 3 credits. At this point, your revenues and expenses should have zero balances. Take a look. 3 Close the Income Summary account. Because there is a NET INCOME, we must debit the INCOME SUMMARY account and credit CAPITAL for the net income amount 4 Finally, close the Drawing account. This will require a debit to the Capital account and a credit to the Drawing account for the Drawing account balance. Verify that the Sales, Expenses, Income Summary and Drawing accounts are at zero. You can look at the trial balance for this verification. Note also that the Capital account, which started with a balance of $40,000, now has a balance of S49,100
