PROBLEM#3 . Prepare closing entries for Happy Dooty Enterprises as of 12/31of th

Question

PROBLEM#3 . Prepare closing entries for Happy Dooty Enterprises as of 12/31of the current year based on the following information from selected accounts from the adjusted trial balance. What is the net income and ending capital balance? . . . Supplies 40,000 Prepaid Rent 7,000 Equipment 90,000 Capital 1/1 106,000 Drawing 4,000 Revenue 84,000 Wages Expense 32,000 Rent Expense 5,000 Depreciation Expense 8,000 Supply Expense 4,000 Insurance Expense 7,000 Cash 24,000 Accts Receivable 12,000 Accum Depreciation - Equipment 16,000 Accts Payable 5,000 Wages Payable 4,000 Note Payable 18,000

Explanation / Answer

Closing Entries

Net income = 84000-56000 = $ 28000

Ending capital balance = Capital 1/1 + Net income - Drawing

Ending capital balance = 106000+28000-4000

Ending capital balance = $ 130000

Trial balance Debit Credit Supplies 40000 Prepaid Rent 7000 Equipment 90000 Capital 1/1 106000 Drawing 4000 Revenue 84000 Wages Expense 32000 Rent Expense 5000 Depreciation Expense 8000 Supply Expense 4000 Insurance Expense 7000 Cash 24000 Accts Receivable 12000 Accum Depreciation - Equipment 16000 Accts Payable 5000 Wages Payable 4000 Note Payable 18000 Total 233000 233000

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