exam 1 (4)

closing entries-balance sheet

How many closing entries do you do?

3

What is the first closing entry?

Debit: Service Revenue

Credit: Retained Earnings

(the number will come from whatever your service revenue is on the adjusted trial balance, the goal is to 0 out this account)

What is the second closing entry?

Debit: Retained Earnings

Credit: All Expense Accounts

(the number will come from the addition of all expense accounts)

What is the third closing entry?

Debit: Retained Earnings

Credit: Dividends

(the number will come from the dividends)

How do you calculate net income?

revenues-expenses

How should you fill in the statement of retained earnings?

The tops blanks are for the business name and “As of the date”. The other blanks are for the words “Net Income” and “Dividends”. There will be an additional blank at the top, place a 0. Then list Net Income out beside net income followed by the net income again. Beside Dividends place the number for dividends (this will be a negative number so use parenthesis). Finally calculate the amount of net income - dividends. Take this number to equity on the balance sheet

How do you fill out the financial statement?

All items for current assets can be listed on the right hand column, along with those for current liabilities, long-term liabilities, and stockholder’s equity. For long-term assets any accounts whose numbers have no changed (ex. land has $0 depreciation) can go on the right side. The left side needs to be reserved for the depreciations (ex. building 48000 will be listed on left side followed by accumulated depreciation- building (175) then calculate this number (47825) and place it on the right side). (add up ONLY the right side numbers)

True or False: Total Assets and Total Liabilities and Stockholder’s Equity HAVE to be doubled underlined to receive full credit while Total Liabilities doesn’t have to be double underlined

True

On the financial statement, what goes on the top 2 blanks?

the business name followed by the date