Question

use the may 31 fiscal year - end information from the following ledger accounts (assume that all accounts have normal balances) to (a) prepare closing journal entries and (b) post those entries to ledger accounts. general ledger m. muncel, capital acct. no. 301 salaries expense acct. no. 622 date pr debit credit balance date pr debit credit balance may 31 g2 40,000 may 31 g2 20,000 m. muncel, withdrawals acct. no. 302 insurance expense acct. no. 637 date pr debit credit balance date pr debit credit balance may 31 g2 22,000 may 31 g2 4,400 services revenue acct. no. 403 rent expense acct. no. 640 date pr debit credit balance date pr debit credit balance may 31 g2 76,000 may 31 g2 8,400 depreciation expense acct. no. 603 income summary acct. no. 901 date pr debit credit balance date pr debit credit balance may 31 g2 15,000 check m muncel, capital (ending balance) $46,200 exercise 4 - 8 preparing and posting closing entries p2

Explanation:

Step1: Close revenue account

Debit Services Revenue (Acct. No. 403) for its balance of 76,000 and credit Income Summary (Acct. No. 901).
Debit: Services Revenue 76,000
Credit: Income Summary 76,000

Step2: Close expense accounts

Debit Income Summary and credit each expense account for their balances.
Salaries Expense (Acct. No. 622) = 20,000
Insurance Expense (Acct. No. 637) = 4,400
Rent Expense (Acct. No. 640) = 8,400
Depreciation Expense (Acct. No. 603) = 15,000
Total expenses = 20,000 + 4,400+8,400 + 15,000 = 47,800
Debit: Income Summary 47,800
Credit: Salaries Expense 20,000
Credit: Insurance Expense 4,400
Credit: Rent Expense 8,400
Credit: Depreciation Expense 15,000

Step3: Close Income Summary

The balance in Income Summary is 76,000 - 47,800=28,200 (credit balance). Debit Income Summary and credit M. Muncel, Capital (Acct. No. 301).
Debit: Income Summary 28,200
Credit: M. Muncel, Capital 28,200

Step4: Close withdrawals account

Debit M. Muncel, Capital and credit M. Muncel, Withdrawals (Acct. No. 302) for its balance of 22,000.
Debit: M. Muncel, Capital 22,000
Credit: M. Muncel, Withdrawals 22,000

Answer:

Closing journal entries:
1.

Account Title	Debit	Credit
Income Summary		76,000

2.

Account Title	Debit	Credit
Salaries Expense		20,000
Insurance Expense		4,400
Rent Expense		8,400
Depreciation Expense		15,000

3.

Account Title	Debit	Credit
M. Muncel, Capital		28,200

4.

Account Title	Debit	Credit
M. Muncel, Withdrawals		22,000

Post - closing ledger accounts:
M. Muncel, Capital (Acct. No. 301)

Date	PR	Debit	Credit	Balance
May 31		28,200	68,200
May 31	22,000		46,200

Salaries Expense (Acct. No. 622)

Date	PR	Debit	Credit	Balance
May 31	20,000		0

Insurance Expense (Acct. No. 637)

Date	PR	Debit	Credit	Balance
May 31	4,400		0

Rent Expense (Acct. No. 640)

Date	PR	Debit	Credit	Balance
May 31	8,400		0

Depreciation Expense (Acct. No. 603)

Date	PR	Debit	Credit	Balance
May 31	15,000		0

Services Revenue (Acct. No. 403)

Date	PR	Debit	Credit	Balance
May 31	76,000		0

M. Muncel, Withdrawals (Acct. No. 302)

Date	PR	Debit	Credit	Balance
May 31	22,000		0

Income Summary (Acct. No. 901)

Date	PR	Debit	Credit	Balance
May 31	28,200		0