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The following adjusted trial balance at December 31 of Wilson Trucking Company.

[tex]\[
\begin{array}{lrr}
\text{Account Title} & \text{Debit} & \text{Credit} \\
\hline
\text{Cash} & \$8,400 & \\
\text{Accounts receivable} & \$17,900 & \\
\text{Office supplies} & \$3,400 & \\
\text{Trucks} & \$176,000 & \$36,400 \\
\text{Accumulated depreciation-Trucks} & \$89,000 & \$13,200 \\
\text{Land} & & \$4,400 \\
\text{Accounts payable} & & \$60,000 \\
\text{Interest payable} & & \$32,000 \\
\text{Long-term notes payable} & & \$142,000 \\
\text{Common stock} & \$20,400 & \$134,000 \\
\text{Retained earnings} & \$23,900 & \\
\text{Dividends} & \$62,200 & \\
\text{Trucking revenue} & \$12,400 & \\
\text{Depreciation expense-Trucks} & \$422,000 & \$422,000 \\
\text{Salaries expense} & & \\
\text{Office supplies expense} & & \\
\end{array}
\][/tex]

Prepare the closing entries for the year ended December 31. The Retained Earnings account balance was \$142,000 at December 31 of the prior year.

Prepare the entry to close the revenue account(s).
Note: Enter debits before credits.

[tex]\[
\begin{array}{|l|l|l|l|}
\hline
\text{Date} & \text{Account Title} & \text{Debit} & \text{Credit} \\
\hline
\text{December 31} & \text{Trucking revenue} & & \\
\hline
& & & \\
\hline
& & & \\
\hline
& & & \\
\hline
\end{array}
\][/tex]



Answer :

GinnyAnswer
Certainly! Let's walk through the preparation of the closing entries step-by-step. We need to close the revenue, expense, and dividend accounts to the Retained Earnings account at the end of the period. Below is a detailed step-by-step explanation:

### Step 1: Close Revenue Account

To close the revenue account, we will debit the revenue account to bring its balance to zero and credit the Income Summary account.

Journal Entry:
\begin{tabular}{|l|l|l|l|}
\hline
Date & Account Title & Debit & Credit \\
\hline
December 31 & Trucking revenue & \[tex]$124,000 & \\ & Income Summary & & \$[/tex]124,000 \\
\hline
\end{tabular}

### Step 2: Close Expense Accounts

Next, we close out the expenses. We will credit each expense account to bring their balances to zero and debit the Income Summary account for the total expenses.

Total expenses are:
- Accumulated Depreciation-Trucks: \[tex]$89,400 - Depreciation Expense-Trucks: \$[/tex]13,200
- Salaries Expense: \[tex]$3,600 - Office Supplies Expense: \$[/tex]2,800

Total Expenses = \[tex]$89,400 + \$[/tex]13,200 + \[tex]$3,600 + \$[/tex]2,800 = \[tex]$109,000 Journal Entry: \begin{tabular}{|l|l|l|l|} \hline Date & Account Title & Debit & Credit \\ \hline December 31 & Income Summary & \$[/tex]109,000 & \\
& Accumulated Depreciation-Trucks & & \[tex]$89,400 \\ & Depreciation Expense-Trucks & & \$[/tex]13,200 \\
& Salaries Expense & & \[tex]$3,600 \\ & Office Supplies Expense & & \$[/tex]2,800 \\
\hline
\end{tabular}

### Step 3: Close Income Summary to Retained Earnings

The Income Summary now contains the net income for the year, which is calculated as the difference between total revenue and total expenses.

Net Income = Trucking Revenue - Total Expenses = \[tex]$124,000 - \$[/tex]109,000 = \[tex]$15,000 Journal Entry: \begin{tabular}{|l|l|l|l|} \hline Date & Account Title & Debit & Credit \\ \hline December 31 & Income Summary & \$[/tex]15,000 & \\
& Retained Earnings & & \[tex]$15,000 \\ \hline \end{tabular} ### Step 4: Close Dividends Account to Retained Earnings Finally, we close the dividends to the Retained Earnings account. This reduces the Retained Earnings by the amount of dividends paid. Dividends = \$[/tex]62,200

Journal Entry:
\begin{tabular}{|l|l|l|l|}
\hline
Date & Account Title & Debit & Credit \\
\hline
December 31 & Retained Earnings & \[tex]$62,200 & \\ & Dividends & & \$[/tex]62,200 \\
\hline
\end{tabular}

### Summary of Closing Entries

Let's summarize all the closing entries:

1. Close Revenue Account:
\begin{tabular}{|l|l|l|l|}
\hline
Date & Account Title & Debit & Credit \\
\hline
December 31 & Trucking revenue & \[tex]$124,000 & \\ & Income Summary & & \$[/tex]124,000 \\
\hline
\end{tabular}

2. Close Expense Accounts:
\begin{tabular}{|l|l|l|l|}
\hline
Date & Account Title & Debit & Credit \\
\hline
December 31 & Income Summary & \[tex]$109,000 & \\ & Accumulated Depreciation-Trucks & & \$[/tex]89,400 \\
& Depreciation Expense-Trucks & & \[tex]$13,200 \\ & Salaries Expense & & \$[/tex]3,600 \\
& Office Supplies Expense & & \[tex]$2,800 \\ \hline \end{tabular} 3. Close Income Summary to Retained Earnings: \begin{tabular}{|l|l|l|l|} \hline Date & Account Title & Debit & Credit \\ \hline December 31 & Income Summary & \$[/tex]15,000 & \\
& Retained Earnings & & \[tex]$15,000 \\ \hline \end{tabular} 4. Close Dividends to Retained Earnings: \begin{tabular}{|l|l|l|l|} \hline Date & Account Title & Debit & Credit \\ \hline December 31 & Retained Earnings & \$[/tex]62,200 & \\
& Dividends & & \$62,200 \\
\hline
\end{tabular}

These journal entries ensure that all temporary accounts are reset to zero for the new accounting period and the Retained Earnings account reflects the changes for the year.