Question

On December 31, the ledger of Davis Company contained the following account balances: Accounts Payable $ 12,000 Fees Income $ 174,000 Accounts Receivable 5,200 Supplies 3,600 Accumulated Depreciation 6,800 Prepaid Rent 58,000 Cash 76,000 Rent Expense 8,400 Depreciation Expense 6,800 Supplies Expense 7,600 Equipment 64,000 Teresa Davis, Capital 101,600 Teresa Davis, Drawing 50,000 Utilities Expense 14,800 All the accounts have normal balances. Prepare the closing entries for Davis Company On December 31.

Answer 1

Answer:

The closing entries of  Teresa Davis shows a profit of $136,400  after expenses were deducted,being transferred to Teresa Davis' capital account as at 31st December.

Also,$50000 withdrawal by a way of drawings was transferred out of the capital account.

Explanation:

In calculating the closing entries I only looked at the transactions in the year that would have impact on Teresa Davis' retained as at 31st December.

Find attached spreadsheet showing the closing entries made in books of Teresa Davis.