7 At 40. The following pre-adjusted data are available from the records of Jazz,

Question

7 At 40. The following pre-adjusted data are available from the records of Jazz, Inc. 20 points Retained earnings, January 1, 2016 Sales Interest expense General and administrative expenses Cost of goods sold Selling expenses Dividend revenue Dividends declared in 2016 Dividends paid in cash in 2016 Income tax rate Cash Merchandise Inventory on 12/31 $115,000 490,000 5,000 95,000 220,000 115,000 10,000 25,000 19.250 30% 100,000 20,000 Common stock outstanding 50,000 shares at $1.00 par $50,000 200,000 Additional Paid In Capital Common stock authorized 100,000 shares 41. Prepare the closing entries below and close the net income to the affected SH equity account: 5 points Sales Dividend Expenses?

Explanation / Answer

Income statement Revenue Sales $ 490,000 Dividend revenue $    10,000 Total revenue $ 500,000 Less: Expenses Interest expense $      5,000 General and administrative expense $    95,000 Cost of goods sold $ 220,000 Selling expense $ 115,000 Total expenses $ 435,000 Income before income tax $    65,000 Income tax ($65,000*30%) $    19,500 Net income $    45,500 Sales $ 490,000 Dividend revenue $    10,000 Income summary $ 500,000 (To close revenue account) Income summary $ 454,500 Interest expense $      5,000 General and administrative expense $    95,000 Cost of goods sold $ 220,000 Selling expense $ 115,000 Income tax expense $    19,500 (To close expenses) Dividend $    25,000 Retained earnings $    25,000 (To close dividend account) Income summary $    45,500 Retained earnings $    45,500 (To record balance in income summary)

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