Question 1

The following is the adjusted trial balance as of December 31,2019 of Wilson Repair Services Company after the first year of operations:
 \(\begin{array}{|l|r|r|}
\hline \text { Accounts } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 18,000 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Prepaid Insurance } & 9,000 \
\hline \text { Office Supplies } & 3,200 \
\hline \text { Land } & 45,000 \
\hline \text { Building } & 165,000 \
\hline \text { Accumulated Depreciation-Building } & & \$ 12,000 \
\hline \text { Equipment } & 88,000 & \
\hline \text { Accumulated Depreciation-Equipment } & & 8,500 \
\hline \text { Accounts Payable } & & 12,000 \
\hline \text { Salaries Payable } & & 2,000 \
\hline \text { Unearned Revenue } & & 25,000 \
\hline \text { Mortgage Payable } & & 100,00 \
\hline \text { Martin, Capital } & & 21,290\ 
\hline \text { Martin, Withdrawals } & 25,840 & \
\hline \text { Service Revenue } & & 325,00 \
\hline \text { Salaries Expense } & 63,000 & \
\hline \text { Depreciation Expense—Building and } & & \
\text { Equipment } & 6,250 & \
\hline \text { Supplies Expense } & 15,000 & \
\hline \text { Insurance Expense } & 14,500 & \
\hline \text { Utilities Expense } & 23,000 & \
\hline \text { Total } & \$ 505,790 & \$ 505,790 \
\hline
\end{array}\)
  Prepare the closing entry for the Income Summary account.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 2

The following is the adjusted trial balance as of December 31,2019 of Brooks Design Studio:
 $\begin{array}{|l|r|r|r|}
\hline\text { Account }&\text { Debit } & \text { Credit }\
\hline \text { Cash } & \$ 1,700& \
\hline \text { Accounts Receivable } & 8,500 & \
\hline \text { Supplies } & 100 & \
\hline \text { Equipment } & 7,500 \
\hline \text { Accumulated Depreciation-Equipment } & &\$2,000\
\hline \text { Accounts Payable } & &1,200 \
\hline \text { Salaries Payable } & & 800 \
\hline \text { Unearned Revenue } & &600 \
\hline \text { Bravo, Capital } &&3,400 \
\hline \text { Bravo, Withdrawals } & 2,300& \
\hline \text { Service Revenue } & &40,000 \
\hline \text { Salaries Expense } &24,000 & \
\hline \text { Supplies Expense } &2,300\
\hline \text { Depreciation Expense-Equipment } &1,600 \
\hline \text {Total}&  \$ 48,000 & \$ 48,000 \
\hline
\end{array}$ Prepare the closing entry for expenses.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 3

The following is the adjusted trial balance as of December 31,2019 of Bright Exteriors Company after the first year of operations:
 \(\begin{array}{|l|r|r|}
\hline \text { Accounts } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 3,000 \
\hline \text { Accounts Receivable } & 45,000 \
\hline \text { Prepaid Insurance } & 9,000 \
\hline \text { Office Supplies } & 3,200 \
\hline \text { Land } & 45,000 \
\hline \text { Building } & 165,000 \
\hline \text { Accumulated Depreciation-Building } & & \$ 12,000 \
\hline \text { Equipment } & 88,000 & \
\hline \text { Accumulated Depreciation-Equipment } & & 8,500 \
\hline \text { Accounts Payable } & & 12,000 \
\hline \text { Salaries Payable } & & 2,000 \
\hline \text { Unearned Revenue } & & 25,000 \
\hline \text { Mortgage Payable } & & 100,00 \
\hline \text { Martin, Capital } & & 21,290\ 
\hline \text { Martin, Withdrawals } & 25,840 & \
\hline \text { Service Revenue } & & 320,00 \
\hline \text { Salaries Expense } & 58,000 & \
\hline \text { Depreciation Expense—Building and } & & \
\text { Equipment } & 6,250 & \
\hline \text { Supplies Expense } & 15,000 & \
\hline \text { Insurance Expense } & 14,500 & \
\hline \text { Utilities Expense } & 23,000 & \
\hline \text { Total } & \$ 500,790 & \$ 500,790 \
\hline
\end{array}\)
 
 Prepare the closing entry for the Income Summary account.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 4

The following is the adjusted trial balance as of December 31,2019 of Martin Security Services Company:
 \(\begin{array}{|l|r|r|}
\hline \text { Accounts } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 18,000 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Prepaid Insurance } & 9,000 \
\hline \text { Office Supplies } & 3,200 \
\hline \text { Land } & 45,000 \
\hline \text { Building } & 165,000 \
\hline \text { Accumulated Depreciation-Building } & & \$ 12,000 \
\hline \text { Equipment } & 88,000 & \
\hline \text { Accumulated Depreciation-Equipment } & & 8,500 \
\hline \text { Accounts Payable } & & 12,000 \
\hline \text { Salaries Payable } & & 2,000 \
\hline \text { Unearned Revenue } & & 25,000 \
\hline \text { Mortgage Payable } & & 100,00 \
\hline \text { Martin, Capital } & & 21,290\ 
\hline \text { Martin, Withdrawals } & 25,840 & \
\hline \text { Service Revenue } & & 325,00 \
\hline \text { Salaries Expense } & 63,000 & \
\hline \text { Depreciation Expense—Building and } & & \
\text { Equipment } & 6,250 & \
\hline \text { Supplies Expense } & 15,000 & \
\hline \text { Insurance Expense } & 14,500 & \
\hline \text { Utilities Expense } & 23,000 & \
\hline \text { Total } & \$ 505,790 & \$ 505,790 \
\hline
\end{array}\)
 Prepare the closing entry for revenues.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 5

Which of the following accounts will have an ending balance after the closing process is completed?
A) Owner, Withdrawals
B) Rent Expense
C) Accumulated Depreciation
D) Service Revenue

Accepted Answer

Accumulated Depreciation is a contra asset account and is not closed at the end of the accounting period. It continues to accumulate the total depreciation of an asset over its useful life, thus it will have an ending balance after the closing process.

Question 6

The following is the adjusted trial balance as of December 31,2018 of Bravo Photography:
 $\begin{array}{|l|r|r|r|}
\hline\text { Account }&\text { Debit } & \text { Credit }\
\hline \text { Cash } & \$ 1,700& \
\hline \text { Accounts Receivable } & 8,500 & \
\hline \text { Supplies } & 100 & \
\hline \text { Equipment } & 7,500 \
\hline \text { Accumulated Depreciation-Equipment } & &\$2,000\
\hline \text { Accounts Payable } & &1,200 \
\hline \text { Salaries Payable } & & 800 \
\hline \text { Unearned Revenue } & &600 \
\hline \text { Bravo, Capital } &&3,400 \
\hline \text { Bravo, Withdrawals } & 2,300& \
\hline \text { Service Revenue } & &40,000 \
\hline \text { Salaries Expense } &24,000 & \
\hline \text { Supplies Expense } &2,300\
\hline \text { Depreciation Expense-Equipment } &1,600 \
\hline \text {Total}&  \$ 48,000 & \$ 48,000 \
\hline
\end{array}$ Provide the closing entry for revenues.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 7

If a business has a net loss,the Income Summary T account would hold a debit balance before the account is closed.

Accepted Answer

When a business has a net loss, the Income Summary T account will hold a debit balance before it is closed. This is because expenses will be greater than revenues, causing the account to have a negative balance.

Question 8

Refer to the following adjusted trial balance. $$\begin{array} { | l | r | r | } 
\hline \text { Accounts } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 1,700 & \
\hline \text { Accounts Receivable } & 8,600 & \
\hline \text { Office Supplies } & 400 & \
\hline \text { Equipment } & 28,100 & \
\hline \text { Accumulated Depreciation-Equipment } & & \$ 2,000 \
\hline \text { Accounts Payable } & & 1,200 \
\hline \text { Salaries Payable } & & 950 \
\hline \text { Unearned Revenue } & & 450 \
\hline \text { Smith, Capital } & & 3,800 \
\hline \text { Smith, Withdrawals } &1,000 & \
\hline \text { Service Revenue } & &55,600 \
\hline \text { Salaries Expense } &20,000\
\hline \text { Supplies Expense } & 2,200 \
\hline \text { Depreciation Expense- Equipment } &2,000\
\hline \text { Total } & \$ 64,000 &\$ 64,000  \
\hline
\end{array}$$ There were no new capital contributions during the year.What will the balance of the Smith,Capital
Account be after the closing entries are posted?
A) $34,200
B) $31,400
C) $35,200
D) $32,400

Accepted Answer

The balance of the Smith, Capital Account after the closing entries are posted will be $34,200. This is because the closing entries will transfer the net income of $10,400 (Service Revenue - Salaries Expense - Supplies Expense - Depreciation Expense) to the Smith, Capital Account, increasing its balance to $34,200 ($3,800 + $10,400).

Question 9

The net income of Hendley Company for the year is $25,000.Withdrawals during the year were $30,000.No new capital contributions were made during the year.Which of the following statements is TRUE?
A) Hendley, Capital account decreases by $25,000.
B) Hendley, Capital account decreases by $5,000.
C) Hendley, Capital account increases by $30,000.
D) Hendley, Capital will remain the same.

Accepted Answer

Withdrawals reduce the owner's capital account, therefore Hendley, Capital account decreases by $30,000. However, since the net income is positive, it partially offsets the decrease in the capital account. Therefore, the overall decrease in the Capital account is $30,000 - $25,000 = $5,000.

Question 10

Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?
A) debit Insurance Expense and credit Income Summary
B) debit Insurance Expense and credit Owner, Capital
C) debit Owner, Withdrawals and credit Insurance Expense
D) debit Income Summary and credit Insurance Expense

Accepted Answer

Closing entries are made at the end of the accounting period to reset the balances of temporary accounts to zero in preparation for the next period. Insurance Expense is a temporary account, and to close it, we must debit the account and credit Income Summary. Therefore, option D is the correct answer.

Question 11

What is the net result if the amount of net income for the year is less than the amount of the owner's withdrawals?
A) Owner, Capital increases
B) Cash balance decreases
C) Cash balance increases
D) Owner, Capital decreases

Accepted Answer

If the amount of net income for the year is less than the amount of the owner's withdrawals, it means that the expenses and/or losses were greater than the revenues and/or gains. This results in a decrease in the owner's equity, specifically the Owner, Capital account, which represents the residual interest in the assets of the business after deducting liabilities. Therefore, the correct answer is D, Owner, Capital decreases. Option A is incorrect because an increase in Owner, Capital would imply a positive net income. Option B is not necessarily true since the cash balance can be affected by other transactions besides withdrawals. Option C is also not necessarily true because the cash balance may have been affected by other sources of inflow or outflow, such as sales or purchases of assets.

Question 12

If a business has a net loss,the closing entry to close Income Summary would be a debit to Income Summary and a credit to Owner,Capital.The business is a sole proprietorship.

Accepted Answer

If a business has a net loss, the closing entry to close Income Summary would be a debit to Owner, Capital and a credit to Income Summary.

Question 13

Which accounts are closed at the end of the accounting period? Why is it necessary to close these accounts?

Accepted Answer

The answer of Which accounts are closed at the end...

Question 14

The following is the adjusted trial balance for Baker Services. \(\begin{array}{|l|r|r|}
\hline \text { Accounts } & \text { Debit } & \text { Credit }\
\hline \text { Cash } & \$ 31,100 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Prepaid Insurance } & 3,500 \
\hline \text { Office Supplies } & 3,200 \
\hline \text { Land } & 49,000 \
\hline \text { Building } & 150,000\
\hline \text { Accumulated Depreciation-Building } & & \$ 14,500 \
\hline \text { Equipment } & 77,000 & 7,000 \
\hline \text { Accumulated Depreciation-Equipment } & & 25,000 \
\hline \text { Accounts Payable } & & 2,000 \
\hline \text { Salaries Payable } & & 26,000 \
\hline \text { Unearned Revenue } & & 106,00 \
\hline \text { Mortgage Payable } & & 24,500\
\text { Baker, Withdrawals } & 23,000 &  \
\hline \text { Service Revenue } & &275,000 \
\hline \text { Salaries Expense } & 64,000 & \
\hline \text { Depreciation Expense-Building and } & & \
\text { Equipment } & 5,600  & \
\hline \text { Supplies Expense } &11,000 & \
\hline \text { Insurance Expense } &  14,600 & \
\hline \text { Utilities Expense } &18,000 \
\hline \text { Total } &  \$ 480,000 & \$ 480,000\
\hline 
\end{array}\)
 There were no new capital contributions during the year.After the closing entries are posted,what is the balance in Baker,Capital?
A) $1,500
B) $209,300
C) $24,500
D) $163,300

Accepted Answer

After the closing entries are posted, the balance in the capital account will be equal to the beginning balance in the capital account plus net income or minus net loss. In this case, the beginning balance in Baker, Capital is given as $150,000. The total debits in the trial balance (excluding the Baker, Capital account) are $558,600, and the total credits are $546,300. Therefore, the net income for the year is $12,300 ($558,600 - $546,300). Adding this to the beginning capital balance of $150,000 gives an ending balance of $162,300. However, there is also a credit balance of $1,000 in the Dividends account that needs to be deducted, resulting in a final balance of $163,300 ($162,300 - $1,000). Therefore, the correct answer is D.

Question 15

Jackson Services Company earned revenues of $104,000,incurred expenses of $113,000.The owner made withdrawals of $4,000.There were no new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?
A) A debit is needed to zero out the balance of the Income Summary account.
B) Jackson, Capital will decrease $13,000.
C) Jackson has incurred a net loss of $5,000.
D) When compared to a business that earned net income, the only closing entry that differs is the one to close the owner's withdrawals.

Accepted Answer

B)
 11ea8873_d461_14ba_bb89_cb8e9dc069a0_TB5026_00

Question 16

Woods Company earned revenues of $12,000 and incurred expenses of $9,500.The owner,Woods,withdrew $3,000.What is the balance in the Income Summary account after closing net income or loss to the Woods,Capital account?
A) debit balance of $12,000
B) credit balance of $9,500
C) credit balance of $2,500
D) balance of $0

Accepted Answer

D) Net Income will be transferred to Woods, Capital account.
The balance in the Income Summary account after closing net income or loss is $0.

Question 17

Which of the following accounts has an ending balance equal to net income immediately before it is closed?
A) Income Summary
B) Owner, Withdrawals
C) Net Income
D) Owner, Capital

Accepted Answer

The Income Summary account is used to temporarily hold revenue and expense balances at the end of the accounting period. Once the net income or loss has been calculated, the balance in the Income Summary account is closed out to the Owner's Capital account or retained earnings account. Therefore, the ending balance of the Income Summary account should be equal to the net income before it is closed.

Question 18

Martinville Company earned revenues of $20,000 and incurred expenses of $4,000.Martinville withdrew $3,500 for personal use.What is the balance in the Income Summary account prior to closing net income or loss to the Martinville,Capital account?
A) debit balance of $16,000
B) debit balance of $12,500
C) credit balance of $16,000
D) credit balance of $20,000

Accepted Answer

The Income Summary account reflects the company's net income or loss, which is calculated as revenues minus expenses. Here, $20,000 (revenues) - $4,000 (expenses) = $16,000 net income, which is a credit balance.

Question 19

The following is the adjusted trial balance as of December 31,2019 of Barone Brothers Company:
 \(\begin{array}{|l|r|r|}
\hline \text { Accounts } &  { \text { Debit } } & { \text { Credit } } \
\hline \text { Cash } & \$ 18,000 \
\hline \text { Accounts Receivable } & 30,000 \
\hline \text { Prepaid Insurance } & 9,000 \
\hline \text { Office Supplies } & 3,200 \
\hline \text { Land } & 45,000 \
\hline \text { Building } & 165,000 \
\hline \text { Accumulated Depreciation-Building } & & \$ 12,000 \
\hline \text { Equipment } & 88,000 & \
\hline \text { Accumulated Depreciation-Equipment } & & 8,500 \
\hline \text { Accounts Payable } & & 12,000 \
\hline \text { Salaries Payable } & & 2,000 \
\hline \text { Unearned Revenue } & & 25,000 \
\hline \text { Mortgage Payable } & & 100,00 \
\hline \text { Martin, Capital } & & 21,290\ 
\hline \text { Martin, Withdrawals } & 25,840 & \
\hline \text { Service Revenue } & & 325,00 \
\hline \text { Salaries Expense } & 63,000 & \
\hline \text { Depreciation Expense—Building and } & & \
\text { Equipment } & 6,250 & \
\hline \text { Supplies Expense } & 15,000 & \
\hline \text { Insurance Expense } & 14,500 & \
\hline \text { Utilities Expense } & 23,000 & \
\hline \text { Total } & \$ 505,790 & \$ 505,790 \
\hline
\end{array}\)
 Prepare the closing entry for expenses.Omit explanation.

Accepted Answer

The answer of The following is the adjusted trial balance...

Question 20

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?
A) The entry to close Income Summary is the same regardless of a net income or a net loss.
B) Olsteen, Capital will be debited for $10,000 and Income Summary will be credited for $10,000.
C) The entries to close revenues and expenses will differ if there is a net loss.
D) The entry to close Income Summary requires a debit to the Income Summary account.

Accepted Answer

The answer of Olsteen Company earned revenues of $61,000 and...

Quiz 4: Completing the Accounting Cycle

Which of the following accounts will have an ending balance after the closing process is completed?

If a business has a net loss,the Income Summary T account would hold a debit balance before the account is closed.

The net income of Hendley Company for the year is $25,000.Withdrawals during the year were $30,000.No new capital contributions were made during the year.Which of the following statements is TRUE?

Which of the following entries will be necessary to close the Insurance Expense account at the end of the year?

What is the net result if the amount of net income for the year is less than the amount of the owner's withdrawals?

If a business has a net loss,the closing entry to close Income Summary would be a debit to Income Summary and a credit to Owner,Capital.The business is a sole proprietorship.

Which accounts are closed at the end of the accounting period? Why is it necessary to close these accounts?

Jackson Services Company earned revenues of $104,000,incurred expenses of $113,000.The owner made withdrawals of $4,000.There were no new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?

Woods Company earned revenues of $12,000 and incurred expenses of $9,500.The owner,Woods,withdrew $3,000.What is the balance in the Income Summary account after closing net income or loss to the Woods,Capital account?

Which of the following accounts has an ending balance equal to net income immediately before it is closed?

Martinville Company earned revenues of $20,000 and incurred expenses of $4,000.Martinville withdrew $3,500 for personal use.What is the balance in the Income Summary account prior to closing net income or loss to the Martinville,Capital account?

Olsteen Company earned revenues of $61,000 and incurred expenses of $71,000.No withdrawals were taken.The owner did not make any new capital contributions during the year.The company is a sole proprietorship.Which of the following statements is correct?