Question

Exercise 3-59 (Algorithmic) Preparation of Closing Entries Grand Rapids Consulting Inc. began 2019 with a retained earnings balance of $28,900 and has the following accounts and balances at year end: Sales Revenue $163,820 Salaries Expense 91,660 Rent Expense 10,550 Utilities Expense 8,415 Supplies Expense 4,348 Income Taxes Expense 13,800 Dividends (declared and paid) 8,400 Required: 1. Prepare the closing entries made by Grand Rapids Consulting at the end of 2019. If an amount box does not require an entry, leave it blank. Dec. 31 (Close revenue accounts) Dec. 31 (Close expense accounts) Dec. 31 (Close Income Summary) Dec. 31 (Close Dividends account) 2. Prepare Grand Rapids Consulting's retained earnings statement for 2019. Grand Rapids Consulting Inc. Retained Earnings Statement For the Year Ended December 31, 2019 $ $

Answer 1

1) December 31, 2019, closing entry for revenue account

Dr Sales revenue 163,820

Cr Income statement 163,820

December 31, 2019, closing entry for expense accounts

Dr Income statement 128,773

Cr Salaries Expense 91,660

Cr Rent Expense 10,550

Cr Utilities Expense 8,415

Cr Supplies Expense 4,348

Cr Income Taxes Expense 13,800

December 31, 2019, closing entry for income statement account

Dr Income statement 35,047

Cr Retained earnings 35,047

December 31, 2019, closing entries for dividends account

Dr Retained earnings 8,400

Cr Dividends 8,400

2) Grand Rapids Consulting Inc.

Retained Earnings Statement

For the year ended December 31, 2019

Beginning balance January 1 ,2019 $28,900

Net profits $35,047

Sub-total $63,947

Dividends ($8,400)

Ending balance December 31 ,2019 $55,547