Side Kicks has year-end account balances of Sales Revenue $832,230; Interest Rev

Question

Side Kicks has year-end account balances of Sales Revenue $832,230; Interest Revenue $17,070; Cost of Goods Sold $588,660; Administrative Expenses $183,680; Income Tax Expense $34,900; and Dividends $18,368. Prepare the year-end closing entries.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)                        

No. Account Titles and Explanation Debit Credit 1. (To close revenue accounts.)

2. (To close expense accounts.)

3. (To close income/(loss).)

4. (To close dividends.)

Explanation / Answer

Sales a/c Dr $832230

Interest Revenue a/c Dr $17070

To Income Summary a/c $849300

( to close revenue to Income summary)

Income Summary a/c Dr $772340

Cost of sales $588660

Administrative Expenses $183680

(to close expenses)

Income Summary a/c Dr $34900

  Income Tax Expense a/c $34900

(to close income tax expense)

Income Tax Expense a/c Dr $34900

Income Tax payable a/c $34900

(Being income tax expense liability created for the year)

Income Summary a/c Dr $42060

Retained earnings $42060

(Being income transferred to retained earnings)

Retained earnings a/c Dr $18368

Dividend a/c $18368

(To close dividend)

Dividend a/c Dr $18368

To Dividend payable $18368

(Being dividend payable for the year)

Calculation of Net income $ Sales 832230 Cost of Good Sold 588660 Gross Profit 243570 Less: administrative expense -183680 Add:Interest Revenue 17070 Net Income before Tax 76960 Less: Income Tax 34900 Net Income after tax 42060 Dividends 18368 Closing entries

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