LO 7 EXERCISE 4-28 CLOSING ENTRIES

At the end of the year, the adjusted trial balance for Dexter Company contains the following amounts for the income statement accounts.

Account- Balance

Advertising Revenue.. $58,500

Interest Revenue... $2,700

Wage and Salary Expense....$14,300

Utilities Expense..... $12,500

Insurance Expense... $7,300

Depreciation Expense... $16,250

Interest Expense..... $2600

Income Tax Expense.... $3,300

Dividends....... $2,000

REQUIRED: CLOSE THESE ACCOUNTS AND LIST THE JOURNAL ENTRIES BELOW

1.Closing entries:

To close revenue accounts. -ABOVE

To close expense accounts.-ABOVE

To transfer net income from Income Summary to Retained- Earnings.-ABOVE

2. To close Dividends to Retained Earnings.-ABOVE

If the accountant forgets to close the revenue and expense accounts at the end of the year, the net income of the following year will be overstated by the amount of net income of the current year, $4,950. In addition, all the revenue and expense account balances will carry over to the following year making it very hard to compare financial statements from one year to the next.

EXERCISE 4.28 CLOSING ENTRIES At the end of the year, the adjusted trial balance for Dexter Company contains the following amounts for tha immonted baiance for Dexter accounts. Dividends 2,000 REQUIRED: CLOSE THESE ACCOUNTS AND LIST THE JOURNAL ENTRIES BELOW 1.Closing entries: To close revenue accounts. -ABOVE To close expense accounts - ABOVE To transfer net income from Income Summary to Retained- Earnings - ABOVE To close Dividends to Retained Earnings-ABOVE 2. If the accountant forgets to close the revenue and expense accounts at the end of the year the net incorne of the following year will be overstated by the amount of net income of the current year, $4,950. In addition; all the revenue and expense account balances will carry over to the following year making it very hard to compare financial statements from one year to the next