Okabe Company ended its fiscal year on July 31, 2017. The company’s adjusted tri

Question

Okabe Company ended its fiscal year on July 31, 2017. The company’s adjusted trial balance as of the end of its fiscal year is shown below.

OKABE COMPANY
Adjusted Trial Balance
July 31, 2017

No.

Account Titles

Debit

Credit

$8,900

9,400

16,200

$7,800

4,000

2,200

44,900

15,500

64,000

7,000

9,000

56,100

14,800

    

$129,900

$129,900

Prepare the closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

(To close revenue accounts)

(To close expense accounts)

(To close net income / (loss))

(To close drawings)

Explanation / Answer

SOLUTION

S.No. Account titles and Explanation Debit ($) Credit ($) 1. Service revenue 64,000 Rent revenue 7,000 Income summary 71,000 (To close revenue accounts) 2. Income summary 79,900 Depreciation expense 9,000 Salaries expense 56,100 Utilities expense 14,800 (To close expense accounts) 3. Retained earnings ($79,900 - $71,000) 8,900 Income summary 8,900 (To close net income / (loss)) 4. Retained earnings 15,500 Owner's drawings 15,500 (To close drawings)

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