The following selected accounts and account balances were taken from the records of Nowell Company. Except as

Question:

The following selected accounts and account balances were taken from the records of Nowell Company. Except as otherwise indicated, all balances are as of December 31, 2018, before the closing Entries were recorded.

Consulting revenue........................................................................$18,200

Cash...................................................................................................35,600

Cash received from common stock issued during 2017..............6,000

Travel expense....................................................................................2,100

Dividends.............................................................................................4,000

Cash flow from investing activities...................................................5,200

Rent expense.....................................................................................3,500

Payment to reduce debt principal..................................................10,000

Retained earnings, January 1, 2018...............................................16,200

Salary expense..................................................................................7,200

Cash flow from operating activities..................................................2,600

Common stock, December 31, 2018.............................................16,000

Other operating expenses................................................................2,300

Required

a. Prepare the income statement Nowell would include in its 2018 annual report.

b. Identify the accounts that should be closed to the Retained Earnings account.

c. Determine the Retained Earnings account balance at December 31, 2018. Identify the reasons for the difference between net income and the ending balance in Retained Earnings.

d. What are the balances in the Revenue, Expense, and Dividend accounts on January 1, 2019? Explain.

Common Stock
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