Question 4 Prepare the required closing entries for the following selected accou

Question

Question 4 Prepare the required closing entries for the following selected accounts from the records of ShipIT Transportation Inc. at December 31, 2016. Cost of services sold $11,600 Accumulated depreciation 17,800 Selling, general, and administrative expense 6,900 Retained earnings, December 31, 2015 1,900 Service revenue 23,600 Depreciation expense 4,100 Other revenue 600 Income tax expense 400 Dividends 400 Income tax payable 300 How much net income did ShipIT Transportation Inc. earn during the year ended December 31, 2016? Prepare a T-account for Retained Earnings to show the December 31, 2016 balance of Retained Earnings.

Explanation / Answer

31-Dec Service revenue 23600 Other revenue 600        Income Summary 24200 31-Dec Income Summary 23000         Cost of services sold 11600         Selling, general, and administrative expense 6900         Depreciation Expense 4100         Income tax expense 400 31-Dec Income Summary 1200       Retained earnings 1200 31-Dec Retained Earnings 400         Dividends 400 The net Income earned during the year $1,200. Retained Earnings Dividend paid 400 Balance Beginning 1900 Net Income 1200 Balance - Ending 2700

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