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Based on the adjusted trial balance below, which of the following journal entries is recorded correctly for closing revenues?

Adjusted Trial Balance

[tex]\[
\begin{tabular}{|c|c|c|}
\hline
\textbf{Accounts} & \textbf{Debit} & \textbf{Credit} \\
\hline
Cash & \$8,700.00 & \\
\hline
Accounts Receivable & \$4,400.00 & \\
\hline
Supplies & \$200.00 & \\
\hline
Prepaid Insurance & \$2,400.00 & \\
\hline
Equipment & \$15,000.00 & \\
\hline
Accumulated Depreciation & & \$250.00 \\
\hline
Accounts Payable & & \$14,000.00 \\
\hline
Unearned Revenue & & \$400.00 \\
\hline
Salaries and Wages Payable & & \$2,100.00 \\
\hline
Common Stock & & \$10,000.00 \\
\hline
Service Revenue & & \$7,700.00 \\
\hline
Salaries and Wages Expense & \$2,100.00 & \\
\hline
Insurance Expense & \$600.00 & \\
\hline
Supplies Expense & \$800.00 & \\
\hline
Depreciation Expense & \$250.00 & \\
\hline
\textbf{Total} & \$34,450.00 & \$34,450.00 \\
\hline
\end{tabular}
\][/tex]



Answer :

GinnyAnswer
To determine the correct journal entry for closing revenues, follow these steps:

1. Identify the revenue account that needs to be closed. In this case, the account is "Service Revenue."
2. The typical approach to close the revenue account involves debiting the revenue account and crediting the retained earnings or income summary account.

From the adjusted trial balance:
- Service Revenue has a credit balance of [tex]$7,700.00. To close the revenue account: - Debit Service Revenue for $[/tex]7,700.00.
- Credit Retained Earnings (or Income Summary) for the same amount.

Here is the detailed journal entry for closing revenues:

Journal Entry:
| Date | Accounts | Debit | Credit |
|------------|---------------------------|----------|----------|
| Month/Year | Service Revenue | \[tex]$7,700.00 | | | | Retained Earnings | | \$[/tex]7,700.00 |

Therefore, the correct journal entry involves debiting Service Revenue and crediting Retained Earnings (or Income Summary) by $7,700.00 each.

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