CHAPTER 6

TRUE OR FALSE

1 F 11 F 21 T 31 F 41 T 51 T 61 T 71 F 81 T 91 F
2 T 12 F 22 T 32 F 42 F 52 F 62 F 72 T 82 F 92 T
3 F 13 F 23 T 33 T 43 F 53 F 63 T 73 T 83 F 93 F
4 F 14 T 24 T 34 T 44 F 54 T 64 F 74 T 84 T 94 T
5 F 15 T 25 T 35 F 45 F 55 F 65 F 75 F 85 T 95 F
6 T 16 T 26 T 36 T 46 F 56 T 66 F 76 F 86 F 96 F
7 T 17 F 27 F 37 F 47 F 57 F 67 F 77 T 87 F 97 T
8 F 18 T 28 T 38 T 48 T 58 T 68 T 78 T 88 F 98 T
9 F 19 T 29 T 39 T 49 T 59 F 69 F 79 F 89 F 99 F
10 T 20 F 30 F 40 F 50 F 60 F 70 F 80 T 90 T 100 T

MULTIPLE CHOICE

1 B 11 B 21 A 31 D 41 B 51 B 61 C 71 D 81 A 91 D
2 B 12 C 22 A 32 C 42 C 52 D 62 A 72 C 82 D 92 C
3 B 13 D 23 A 33 C 43 A 53 B 63 C 73 A 83 B 93 C
4 D 14 A 24 C 34 C 44 B 54 B 64 D 74 C 84 A 94 D
5 C 15 C 25 D 35 B 45 B 55 D 65 D 75 B 85 B 95 C
6 D 16 A 26 B 36 D 46 A 56 C 66 A 76 C 86 D 96 A
7 A 17 D 27 B 37 D 47 C 57 D 67 B 77 A 87 A 97 D
8 C 18 B 28 C 38 C 48 C 58 C 68 D 78 A 88 D 98 C
9 B 19 A 29 B 39 D 49 B 59 B 69 C 79 A 89 D 99 D
10 A 20 B 30 B 40 B 50 C 60 C 70 C 80 D 90 C C

C B C
D A A
D A A
C C C
B A A
B C A
C D
C B
C A
C C
STRAIGHT PROBLEMS
Problem 1:
PAUL COMPANY
WORKSHEET
For the month ended September 30, 2030

UNADJUSTED ADJUSTED
TRIAL TRIAL INCOME BALANCE
BALANCE ADJUSTMEN TS BALANCE STATEMEN T SHEET

Accounts Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Accounts receivable 500 500 500
Prepaid rent 20 4 16 16
Supplies 12 10 2 2
Equipment 100 100 100
Accumulated
Depreciation 20 5 25 25
Accounts payable 50 50 50
Paul, Capital 386 386 386
Paul, Drawing 15 15 15
Rent income 212 24 188 188
Depreciation
Expense 5 5 10 10
Rent expense 6 4 10 10
Salaries expense 10 5 15 15
T otals 668 668
Supplies expense 10 10 10
Unearned rent 24 24 24
Salaries payable 5 5 5
Totals 48 48 678 678 45 188 633 490
Net Income 143 143
Totals 188 188 633 633
Problem 2:
LOUIE COM PANY
W ORKSHEET
For the month ended October 31, 2030

UNADJUSTED ADJUSTED
TRIAL TRIAL INCOME BALANCE
BALANCE ADJUSTMEN TS BALANCE STATEMEN T SHEET
Accounts Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 200 200 200
Supplies 12 9 3 3
Prepaid insurance 24 18 6 6
Machine 240 240 240
Accumulated 5 2 7 7
Depreciation
Accounts payable 60 60 60
Notes Payable 48 48 48
Louie, Capital 321 321 321
Louie, Drawing 8 8 8
Service fee 82 16 66 66
Utilities expense 32 32 32
T otal 516 516
Supplies expense 9 9 9
Insurance expense 18 18 18
Unearned fee 16 16 16
Depreciation 2 2 2
Expense
Rent expense 16 16 16
Rent payable 16 16 16
Total 51 61 534 534 77 66 457 468
Net Income (loss) 11 11
Total 77 77 468 468
 Problem 3:
Unadjusted T rial Adjusted T rial Income
Balance Adjustments Balance Statement Balance Sheet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 150,000 150,000 150,000
Accounts receivable 90,000 90,000 90,000
P repaid insurance 12,000 2,000 10,000 10,000
Supplies 5,000 3,800 1,200 1,200
Land 1,000,000 1,000,000 1,000,000
Building 2,500,000 2,500,000 2,500,000
Accumulated
250,000
Depreciation 25,000 275,000 275,000
Accounts payable 40,000 40,000 40,000
Unearned rent income 400,000 100,000 300,000 300,000
10% Notes payable 800,000 800,000 800,000
Byron, capital 1,737,000
1,737,000 1,737,000
Byron, draw ing 50,000 50,000 50,000
Rent Income 600,000 100,000 700,000 700,000
Utilities expense 20,000 20,000 20,000
Total 3,827,000 3,827,000

Insurance expense 2,000 2,000 2,000

Supplies expense 3,800 3,800 3,800
Depreciation expense 25,000 25,000 25,000
Salaries expense 10,000 10,000 10,000
Salaries payable 10,000 10,000 10,000
Interest expense 60,000 60,000 60,000
Interest payable 60,000 60,000 60,000

200,800 200,800 3,922,000 3,922,000 120,800 700,000 3,801,200 3,222,000

Net Income - 579,200 579,200
700,000 700,000 3,801,200 3,801,200

Problem 4:
1 Cash 1,000,000
Darwin, capital 1,000,000

2 Equipment 240,000
Darwin, capital 240,000

3 Supplies 15,000
Cash 15,000

4 Accounts receivable 50,000

Consulting fee 50,000
 5 Cash 120,000
Consulting fee 120,000

6 Furniture 80,000
Cash 20,000
Accounts payable 60,000

7 Drawing 100,000
Cash 100,000

8 Accounts receivable 150,000

Consulting fee 150,000

9 Cash 40,000
Accounts Receivable 40,000

10 Utilities expense 20,000

Cash 20,000

11 Salaries expense 180,000

Cash 180,000

Adjusting entries
a Supplies expense 13,500
Supplies 13,500

b Salaries expense 20,000

Salaries payable 20,000

Unadjusted T rial
Balance Adjustments Adjusted T rial Balance Income Statement Balance Sheet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 825,000 825,000 825,000
Accounts receivable 160,000 160,000 160,000
Supplies 15,000 13,500 1,500 1,500
Equipment 240,000 240,000 240,000
Furniture 80,000 80,000 80,000
Accounts payable 60,000 60,000 60,000
Capital 1,240,000 1,240,000 1,240,000
Draw ing 100,000 100,000 100,000
Consulting fee 320,000 320,000 320,000
Salaries expense 180,000 20,000 200,000 200,000
Utilities expense 20,000 20,000 20,000
1,620,000 1,620,000
Supplies expense 13,500 13,500 13,500
Salaries payable 20,000 20,000 20,000
33,500 33,500 1,640,000 1,640,000 233,500 320,000 1,406,500 1,320,000
86,500 86,500
320,000 320,000 1,406,500 1,406,500
Problem 5:
1 Cash 1,500,000
Capital 1,500,000

2 Equipment 750,000
Cash 750,000

3 Supplies 60,000
Accounts payable 60,000

4 Cash 1,000,000
Loan payable 1,000,000

5 Accounts receivable 112,000

Service income 112,000

6 Utilities expense 20,000

Utilities payable 20,000

7 Accounts receivable 40,000

Service income 40,000

8 Salaries expense 60,000

Cash 60,000

9 Cash 80,000
Accounts receivable 80,000

10 Cash 340,000
Service income 340,000

11 Accounts payable 25,000

Cash 25,000

Adjusting entries
a Salaries expense 20,000
Salaries payable 20,000

b Depreciation expense 31,250

Accumulated depreciation 31,250
750,000/6yrs x3/12

c Supplies expense 58,000

Supplies 58,000
(60,000 - 2000)
 Unadjusted T rial Adjusted T rial Income
Balance Adjustments Balance Statement Balance Sheet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 2,085,000 2,085,000 2,085,000
Accounts receivable 72,000 72,000 72,000
Supplies 60,000 58,000 2,000 2,000
Equipment 750,000 750,000 750,000
Accounts payable 35,000 35,000 35,000
Loan payable 1,000,000 1,000,000 1,000,000
Utilities payable 20,000 20,000 20,000
Capital 1,500,000 1,500,000 1,500,000
Draw ing
Service income 492,000 492,000 492,000
Salaries expense 60,000 20,000 80,000 80,000
Utilities expense 20,000 20,000 20,000
3,047,000 3,047,000

Salaries payable 20,000 20,000 20,000

Depreciation
expense 31,250 31,250 31,250
Accumulated dep. 31,250 31,250 31,250
Supplies expense 58,000 58,000 58,000
109,250 109,250 3,098,250 3,098,250 189,250 492,000 2,909,000 2,606,250
302,750 302,750
492,000 492,000 2,909,000 2,909,000

Closing entries
1 Service income 492,000
Income summary 492,000

2 Salaries expense 80,000

Utilities expense 20,000
Depreciation expense 31,250
Supplies expense 58,000
Income Summary 189,250

3 Income summary 302,750

Capital 302,750

Problem 6:
1 Cash 1,500,000
Capital 1,500,000

2 Cash 1,000,000
Loan Payable 1,000,000

3 Supplies 14,000
Accounts Payable 14,000
 4 Equipment 500,000
Cash 500,000

5 Accounts Receivable 260,000

Service Income 260,000

6 Utilities expense 32,000

Cash 32,000

7 Salaries expense 82,000

Salaries payable 82,000

8 Cash 110,000
Service Income 110,000

9 Drawing 40,000
Cash 40,000

10 Accounts Payable 8,000

Cash 8,000

11 Cash 140,000
Accounts Receivable 140,000

Adjusting Entries
a Salaries expense 16,000
Salaries payable 16,000

b Depreciation expense 57,292

Accumulated Depreciation 57,292
(500,000/8) x 11/12

c Supplies expense 13,600

Supplies 13,600
 Unadjusted T rial Adjusted T rial Income
Balance Adjustments Balance Statement Balance Sheet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 2,088,000 2,088,000 2,088,000
Accounts receivable 120,000 120,000 120,000
Supplies 14,000 13,600 400 400
Equipment 500,000 500,000 500,000
Accounts payable 6,000 6,000 6,000
Loan P ayable 1,000,000 1,000,000 1,000,000
Capital 1,500,000 1,500,000 1,500,000
Draw ing 40,000 40,000 40,000
Service Income 370,000 370,000 370,000
Salaries expense 82,000 16,000 98,000 98,000
Utilities expense 32,000 32,000 32,000
2,876,000 2,876,000

Salaries payable - 16,000 16,000 16,000

Depreciation expense 57,292 57,292 57,292
Accum. Depreciation 57,292 57,292 57,292
Supplies expense 13,600 13,600 13,600
86,892 86,892 2,949,292 2,949,292 200,892 370,000 2,748,400 2,579,292
169,108 169,108
370,000 370,000 2,748,400 2,748,400

Closing Entries
1 Service Income 370,000
Income Summary 370,000

2 Salaries expense 98,000

Utilities expense 32,000
Supplies expense 13,600
Depreciation expense 57,292
Income Summary 200,892

3 Income Summary 169,108

Capital 169,108

4 Capital 40,000
Drawing 40,000
 INCOME STATEMENT

Revenue
Service Income 370,000

Expenses
Salaries expense 98,000
Utilities expense 32,000
Supplies expense 13,600
Depreciation expense 57,292 200,892
Net Income 169,108

STATEMENT OF CHANGES IN OW NER’S EQUITY

Beginning Capital 1,500,000
Add: Additional Investment -
Net Income 169,108 169,108
Total 1,669,108
Less: Drawing 40,000
Ending Capital 1,629,108

BALANCE SHEET

ASSETS
Cash 2,088,000
Accounts Receivable 120,000
Supplies 400
Equipment 500,000
Accumulated Depreciation (57,292) 442,708
Total Assets 2,651,108

LIABILTIES AND CAPITAL

LIABILITIES
Accounts Payable 6,000
Loan Payable 1,000,000
Salaries payable 16,000
Total Liabilities 1,022,000

CAPITAL
Capital 1,629,108

Total Liabilities and Capital 2,651,108

Problem 7:
 6 a. Prepare worksheet
9 b. Prepare post-closing trial balance
1 c. Analyze business transactions and events
3 d. Post to ledger accounts
7 e. Prepare financial statements
2 f. Journalize the business transactions and events
8 g. Prepare closing entries
5 h. Journalize and post adjusting entries
10 i. Prepare the reversing entries
4 j. Prepare the unadjusted trial balance

Problem 8:

T 1. Supplies expense P 13. Interest payable

P 2. Ow ner's capital T 14. Ow ner's draw ing
P 3. Cash P 15. Accounts payable
P 4. Allow ance for doubtful account P 16. Loans payable
T 5. Doubtful account expense T 17. Income summary
T 6. Service income P 18. Equipment
P 7. Accumulated depreciation P 19. Supplies
T 8. Rent expense P 20. Notes receivable
P 9. Accrued expense T 21. Supplies expense
P 10. Accrued income P 22. Royalty
P 11. Unearned revenue P 23. Franchise
P 12. Interest receivable P 24. Long term investment

Problem 9:
Balance Income Closing
Sheet Statement Entry
Account Dr. Cr. Dr. Cr. Yes No
Supplies X x
Royalty income x X
Royalty X X
Rent expense X X
Owner's, capital x x
Accrued expense X X
Professional fee x X
Allowance for doubtful account x x
Unearned rent x x
Prepaid insurance x x
Loans payable x X
Franchise x X
Cash x x
Utilities expense x x
Accrued income x x
Rent income x x
Accumulated depreciation x x
Owner's, drawing x x
Problem 10:
Income Balance Closing
Statement Sheet Entries
Account Titles
Dr. Cr. Dr. Cr. Dr. Cr.
1 Accounts receivable x
2 Accounts payable x
3 Interest receivable x
4 Interest expense x x
5 Doubtful account expense x x
6 Depreciation expense x x
7 Allowance for doubtful accounts x
8 Accumulated depreciation x
9 Paz, capital x
10 Salaries expense x x
11 Professional fee x x
12 Paz, drawing x x
13 Mortgage payable x
14 Equipment x
15 Commission income x x
16 Accrued revenue x
17 Accrued expense x
18 Interest income x x
19 Advertising expense x x
20 Franchise x
21 Loan payable x
22 Notes payable x
23 Rent expense x x
24 Royalty x
25 Salaries payable x
26 Taxes expense x x

Problem 11:

Closing entries
1 Revenues 64,000
Income Summary 64,000

2 Income summary 82,000

Expense 82,000

3 Capital 18,000
 Income summary 18,000

4 Capital 9,000
Drawing 9,000

Statement of Changes in Owners' Equity

Beg. Capital 500,000
Add: Additional Investment 25,000
Net Income (loss) (18,000) 7,000
Total 507,000
Less Drawings 9,000
Ending Capital 498,000

Problem 12:

Closing entries
1 Service Income 100,000
Income summary

2 Income summary 40,900

Salaries expense 30,000
Utilities expense 2,500
Gas and oil expense 1,000
Rent expense 4,500
Depreciation expense 2,400
Supplies expense 500

3 Income summary 59,100

Capital 59,100

4 Drawing 10,000
Capital 10,000

Statement of Changes in Owners' Equity

Beg. Capital 256,000
Add: Additional Investment 17,500
Net Income (loss) 59,100 76,600
Total 332,600
Less Drawings 10,000
Ending Capital 322,600

Problem 13:
24-
Dec Salaries expense 36,000
Cash 36,000
 31-
Dec Salaries expense 6,000
Salaries payable 6,000

Closing entry
Income summary 42,000
Salaries expense 42,000

A. Reversing entry
1-Jan Salaries payable 6,000
Salaries expense 6,000

28-
Jan Salaries expense 28,000
Cash 28,000

B. W ithout Reversing entry

28-
Jan Salaries expense 22,000
Salaries payable 6,000
Cash 28,000

Problem 14:
a Professional Fee 48,000
Income Summary 48,000

b Income Summary 11,500

Depreciation expense 2,500
Rent expense 8,000
Supplies expense 400
Doubtful account expense 600

c Income Summary 36,500

Norina, capital 36,500

d Norina, capital 250,000

Norina, Drawing 250,000

Problem 15:

a Service Revenue 300,000

Income Summary 300,000

b Income Summary 100,000

Depreciation expense 20,000
Salaries expense 80,000

c Income Summary 200,000

Sol, capital 200,000
 d Sol, capital 20,000
Sol, Drawing 20,000

Problem 16:
Unadjusted T rial Adjusted T rial
Balance Adjustments Balance Income Statement Balance Sheet
Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
Cash 250,000 250,000 250,000
Accounts Receivable 120,000 120,000 120,000
P repaid Insurance 24,000 20,000 4,000 4,000
Supplies 25,000 23,000 2,000 2,000
P repaid Rent 60,000 50,000 10,000 10,000
Office Equipment 600,000 600,000 600,000
Accumulated Dep. 50,000 50,000 100,000 100,000
Accounts Payable 250,000 250,000 250,000
Salvador, Capital 250,000 250,000 250,000
Salvador, Drawing 100,000 100,000 100,000
P rofessional Fee 1,185,000 1,185,000 1,185,000
Salaries Expense 500,000 20,000 520,000 520,000
Utilities Expense 50,000 50,000 50,000
Supplies Expense 6,000 23,000 29,000 29,000
1,735,000 1,735,000

Depreciation expense 50,000 50,000 50,000

Salaries payable 20,000 20,000 20,000
Insurance expense 20,000 20,000 20,000
Rent expense 50,000 50,000 50,000
163,000 163,000 1,805,000 1,805,000 719,000 1,185,000 1,086,000 620,000
466,000 466,000
1,185,000 1,185,000 1,086,000 1,086,000

Problem 17:

b Interest Income 5,000

Interest Receivable 5,000

e Salaries payable 15,000

Salaries expense 15,000

f Unearned rent income 50,000

Rent Income 50,000
Problem 18:

Closing Entries
Service Revenue 125,000
Income Summary 125,000

Salaries expense 15,000

Advertising expense 7,000
Rent expense 4,000
Insurance expense 8,000
Depreciation expense 35,000
Income Summary 69,000

Income Summary 56,000

Capital 56,000

Capital 7,500
Drawing 7,500

INCOME STATEMENT

Revenue
Service Income 125,000

Expenses
Salaries expense 15,000
Advertising expense 7,000
Rent expense 4,000
Insurance expense 8,000
Depreciation expense 35,000 69,000
Net Income 56,000

STATEMENT OF CHANGES IN OW NERS EQUITY

Beginning Capital 120,000
Add: Additional Investment -
Net Income 56,000 56,000
Total 176,000
Less: Drawing 7,500
Ending Capital 168,500
 BALANCE SHEET

ASSETS
Cash 63,500
Accounts Receivable 100,000
Prepaid Insurance 75,000
Equipment 175,000
Accumulated Depreciation (70,000) 105,000
Total Assets 343,500

LIABILTIES AND CAPITAL

LIABILITIES
Accounts Payable 10,000
Notes Payable 85,000
Unearned revenue 80,000
Total Liabilities 175,000

CAPITAL
Capital 168,500

Total Liabilities and Capital 343,500

Problem 19:

1. Yes
2. No
3. Yes
4. No
5. No
6. No
7. Yes
8. No
9. No
10. Yes

Problem 20:
1 Service Income 224,000
Income Summary 224,000

2 Income Summary 76,500

Depreciation expense 20,000
Doubtful account expense 1,000
Gas and oil expense 1,500
Rent expense 24,000
 Salaries expense 25,000
Supplies expense 500
Utilities expense 4,500

3 Income Summary 147,500

Jenny Capital 147,500

4 Jenny capital 5,000

Jenny Drawing 5,000

Income Statement

Revenues
Service income 224,000

Expenses
Depreciation expense 20,000
Doubtful account expense 1,000
Gas and oil expense 1,500
Rent expense 24,000
Salaries expense 25,000
Supplies expense 500
Utilities expense 4,500 76,500
Net Income 147,500

Statement of Changes in Owner's Equity

Beginning Capital 552,000
Add: Additional Investment -
Net Income 147,500 147,500
Total 404,500
Less: Drawing 5,000
Ending Capital 399,500

Balance Sheet
Assets
Cash 205,000
Accounts Receivable 42,000
Allowance for doubtful accounts (2,500) 39,500
Equipment 300,000
Accumulated Depreciation (80,000) 220,000
Total Assets 464,500

Liabilities
Accounts Payable 15,000
Notes payable 50,000
 Total Liabilities 65,000

Capital
Jenny Capital 399,500
Total Capital 399,500
Total Liabilities and Capital 464,500

Problem 21:

Closing entries Post-Closing

Dr Cr Dr Cr
Gas and Oil expenses 2,400
Jan, capital 958,000
Jan, drawing 16,000
Land 600,000
Long term investment 200,000
Miscellaneous expenses 2,800
Utilities expense 4,600
Supplies expense 800
Service revenue 520,000
Salaries expense 50,000
Rent expense 15,000
Allowance for doubtful accounts 12,000
Cash 350,000
Depreciation expense 2,000
Doubtful account expense 600
Accounts payable 15,000
Notes payable 240,000
Furniture and fixtures 30,000
Equipment 40,000
Accumulated depreciation 20,000
Accounts receivable 25,000
Total 520,000 94,200 1,245,000 1,245,000

Problem 22:

P aula
Beginning Capital (150K -25K) 125,000
Add: Additional Investment 32,000
Net Income (loss) 84,000
Total 241,000
Less: Drawing 16,000
Ending Capital (325K - 100K ) 225,000

Anton
 Beginning Capital (65K-25K) 40,000
Add: Additional Investment 10,000
Net Income (loss) 105,000
Total 155,000
Less: Drawing 15,000
Ending Capital 140,000

Louie
Beginning Capital (320K-125K) 195,000
Add: Additional Investment 2,500
Net Income (loss) (132,500)
Total 65,000
Less: Drawing 5,000
Ending Capital 60,000

Louisa
Beginning Capital (100-47K) 53,000
Add: Additional Investment 5,000
Net Income (loss) 15,000
Total 73,000
Less: Drawing 10,000
Ending Capital 63,000

Assets 100,000
Capital (63,000)
Liabilities 37,000

Problem 23:
1 Service Revenue 100,000
Income Summary 100,000

2 Income Summary 25,500

Rent expense 5,000
Utilities expense 2,000
Supplies expense 500
Gas expense 10,000
Depreciation expense 8,000

3 Income Summary 74,500

Capital 74,500

4 Capital 7,500
Drawing 7,500

Statement of Changes in Owners' Equity

 Beg. Capital 40,000
Add: Additional Investment -
Net Income (loss) 74,500 74,500
Total 114,500
Less Drawings 7,500
Ending Capital 107,000

Problem 24:
a Interest payable 1,000
Interest expense 1,000

d Interest income 1,200

Interest receivable 1,200

Problem 25:

Operating Activities
Cash paid to employees (16,000)
Cash paid to suppliers (14,000)
Cash receipts from customers 268,000
Income tax paid (18,500)
Interest paid (9,000)
Interest received 1,200
Cash flow from Operating activities 211,700

Investing Activities
Purchase of equipment for cash (160,000)
Proceeds from sale of equipment 20,000
Purchase of bonds 25,000
Cash flow from Investing activities (115,000)

Financing Activities
Withdrawal of cash for personal use (18,000)
Cash flow from financing activities (18,000)

Increase (decrease) in cash 78,700

Beginning cash 250,000
Total Ending Cash balance 328,700

Problem 26:

1. I
2. O
3. O
4. F
5. O
 6. Non-cash
7. I
8. F
9. O
10. Non-cash
11. I
12. O
13. I
14. O
15. F

Problem 27:

1. F
2. I
3. O
4. O
5. O
6. O
7. O
8. O
9. O
10. F
11. I
12. I
13. O
14. O
15. F

Problem 28:

Adjusting entries
1 Advertising expense 73,350
Prepaid advertising 73,350

2 Rent expense 49,500

Prepaid rent 49,500

3 Unearned royalty income 40,500

Royalty income 40,500

4 Salaries expense 31,500

Salaries payable 31,500

5 Depreciation expense 18,000

Accumulated Depreciation 18,000
6 Accounts receivable 4,500
Royalty income 4,500

7 Supplies expense 11,250

Supplies 11,250

Closing Entries
1 Capital 49,500
Drawings 49,500

2 Income Summary 363,800

Rent expense 49,500
Salaries expense 202,500
Advertising expense 73,350
Depreciation expense 18,000
Supplies expense 20,250

3 Royalty income 477,000

Income summary 477,000

4 Income summary 113,200

Capital 113,200