Understanding Post-Closing Trial Balances and Accounting Cycles
Posted on Jun 8, 2024 in Economy
Post-Closing Trial Balance Accounts
Identify which of the following accounts would appear in a post-closing trial balance.
| Accumulated Depreciation—Equipment |
Closing Entries in Accounting
Closing entries are necessary for:
| both permanent and temporary accounts.
|
| permanent or real accounts only.
|
Closing entries are journalized and posted:
| at management’s discretion.
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| before the financial statements are prepared.
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| at the end of each interim accounting period.
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| after the financial statements are prepared.
|
Closing the Dividends Account
In order to close the dividends account, the:
| retained earnings account should be debited.
|
| income summary account should be credited.
|
| income summary account should be debited.
|
| retained earnings account should be credited.
|
Preparing Closing Entries
In preparing closing entries:
| the retained earnings account will be debited if there is net income for the period.
|
| each expense account will be credited.
|
| the dividends account will be debited.
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| each revenue account will be credited.
|
Camera Obscura Enterprises – June 2018
The income statement for the month of June, 2018 of Camera Obscura Enterprises contains the following information:
| Revenues | | $7000 |
| Expenses: | | |
| Salaries and Wages Expense | $3000 | |
| Rent Expense | 1500 | |
| Advertising Expense | 800 | |
| Supplies Expense | 300 | |
| Insurance Expense | 100 | |
| Total expenses | | 5700 |
| Net income | | $1300 |
The entry to close the revenue account includes a:
| debit to Income Summary for $7000.
|
| credit to Income Summary for $7000.
|
| debit to Income Summary for $1300.
|
| credit to Income Summary for $1300.
|
| Revenues | | $7000 |
| Expenses: | | |
| Salaries and Wages Expense | $3000 | |
| Rent Expense | 1500 | |
| Advertising Expense | 800 | |
| Supplies Expense | 300 | |
| Insurance Expense | 100 | |
| Total expenses | | 5700 |
| Net income | | $1300 |
The entry to close the expense accounts includes a:
| credit to Rent Expense for $1500.
|
| debit to Salaries and Wages Expense for $3000.
|
| debit to Income Summary for $1300.
|
| credit to Income Summary for $5700.
|
| Revenues | | $7000 |
| Expenses: | | |
| Salaries and Wages Expense | $3000 | |
| Rent Expense | 1500 | |
| Advertising Expense | 800 | |
| Supplies Expense | 300 | |
| Insurance Expense | 100 | |
| Total expenses | | 5700 |
| Net income | | $1300 |
After the revenue and expense accounts have been closed, the balance in Income Summary will be:
| a credit balance of $1300.
|
| a debit balance of $1300.
|
| a credit balance of $7000.
|
| Revenues | | $7000 |
| Expenses: | | |
| Salaries and Wages Expense | $3000 | |
| Rent Expense | 1500 | |
| Advertising Expense | 800 | |
| Supplies Expense | 300 | |
| Insurance Expense | 100 | |
| Total expenses | | 5700 |
| Net income | | $1300 |
The entry to close Income Summary to Retained Earnings includes:
| a credit to Income Summary for $1300.
|
| a credit to Retained Earnings for $1300.
|
| a debit to Revenues for $7000.
|
| credits to Expenses totaling $5700.
|
| Revenues | | $7000 |
| Expenses: | | |
| Salaries and Wages Expense | $3000 | |
| Rent Expense | 1500 | |
| Advertising Expense | 800 | |
| Supplies Expense | 300 | |
| Insurance Expense | 100 | |
| Total expenses | | 5700 |
| Net income | | $1300 |
At June 1, 2018, Camera Obscura reported retained earnings of $35000. The company had no dividends during June. At June 30, 201
8, the company will report retained earnings of
| $35000.
A post-closing trial balance will show
| only income statement accounts.
|
| zero balances for balance sheet accounts.
|
| only balance sheet accounts.
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| zero balances for all accounts.
|
|
Which of the following depicts the proper sequence of steps in the accounting cycle?
| Prepare a trial balance, prepare adjusting entries, prepare financial statements.
|
| Prepare a trial balance, prepare financial statements, prepare adjusting entries.
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| Prepare a trial balance, post to ledger accounts, post adjusting entries.
|
| Journalize the transactions, analyze business transactions, prepare a trial balance.
|
The following information is for Sunny Day Real Estate:
Sunny Day Real Estate
Balance Sheet
December 31, 2018 |
| Cash | | $ 25000 | | Accounts Payable | | | $ 60000 |
| Prepaid Insurance | | 30000 | | Salaries and Wages Payable | | | 15000 |
| Accounts Receivable | | 50000 | | Mortgage Payable | | | 85000 |
| Inventory | | 70000 | | Total Liabilities | | | 160000 |
| Land Held for Investment | | 85000 | | | | | |
| Land | | 120000 | | | | | |
| Buildings | $100000 | | | Common Stock | $120000 | | |
| Less Accumulated | | | | Retained Earnings | 250000 | | 370000 |
| Depreciation | (20000) | 80000 | | | | | |
| Trademark | | 70000 | | Total Liabilities and | | | |
| Total Assets | | $530000 | | Stockholders’ Equity | | | $530000 |
The total dollar amount of assets to be classified as current assets is
The following information is for Sunny Day Real Estate:
Sunny Day Real Estate
Balance Sheet
December 31, 2018 |
| Cash | | $ 25000 | | Accounts Payable | | | $ 60000 |
| Prepaid Insurance | | 30000 | | Salaries and Wages Payable | | | 15000 |
| Accounts Receivable | | 50000 | | Mortgage Payable | | | 85000 |
| Inventory | | 70000 | | Total Liabilities | | | 160000 |
| Land Held for Investment | | 85000 | | | | | |
| Land | | 120000 | | | | | |
| Buildings | $100000 | | | Common Stock | $120000 | | |
| Less Accumulated | | | | Retained Earnings | 250000 | | 370000 |
| Depreciation | (20000) | 80000 | | | | | |
| Trademark | | 70000 | | Total Liabilities and | | | |
| Total Assets | | $530000 | | Stockholders’ Equity | | | $530000 |
The total dollar amount of liabilities to be classified as current liabilities is
