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The ledger of Duston Company contains the following balances: Owner's Capital $28,800; Owner's...

Question:

The ledger of Duston Company contains the following balances: Owner's Capital $28,800; Owner's Drawings $1,700; Service Revenue $50,000; Salaries and Wages Expense $25,200; and Supplies Expense $6,200.

The closing entries are as follows:

1. Close revenue accounts
2. Close expense accounts
3. Close net income or loss
4. Close drawings

Post the closing entries in the order presented in the problem and the numbers as a reference.

Closing Entries:

Closing entries are made at the end of an accounting period to transfer the balances from the temporary accounts and make them zero, by transferring them to permanent accounts. These temporary accounts the accounts that are present in the income statement and the permanent accounts are present in the balance sheet. If the closing entries are not made, the revenues and expenses of the next period will not have proper accounting as the balances of the previous period are not yet cleared.

Answer and Explanation:

The closing entries for Duston Company are made below:

EventGeneral JournalDebitCredit
1)Service Revenue$50,000
Income Summary $50,000
(to close...

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Closing Entries: Process, Major Steps, Purpose & Objectives

from Accounting 101: Financial Accounting

Chapter 4 / Lesson 9
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