Answer :
To prepare the closing entries, we need to close temporary accounts (revenue and expense accounts) to the capital account (K. Wilson, Capital). Let's follow these steps:
1. Close Revenue Accounts to the Income Summary:
If we had the actual revenue accounts listed, we would debit each revenue account for its balance and credit the Income Summary for the total amount. For simplicity, let's assume "Trucking revenue" is the only revenue we have, which is already balanced in the totals given.
[tex]\[ \text{In our example, we don't see individual revenue amounts to close. Let's proceed to the next step.} \][/tex]
2. Close Expense Accounts to the Income Summary:
We will credit each expense account and debit the Income Summary with the total expenses amount, which is:
- Depreciation Expense-Trucks: \$25200
- Salaries Expense: \$66100
- Office Supplies Expense: \$9700
- Interest Expense: \$13790
[tex]\[ \begin{array}{c} \text{Income Summary} \quad \text{Debit} \quad \text{Credit} \\ \hline 25200 \qquad \qquad & & 25200 \quad \text{Depreciation Expense-Trucks} \\ 66100 \qquad \qquad & & 66100 \quad \text{Salaries Expense} \\ 9700 \qquad \qquad & & 9700 \quad \text{Office Supplies Expense} \\ 13790 \qquad \qquad & & 13790 \quad \text{Interest Expense} \\ \end{array} \][/tex]
3. Close Income Summary to Capital Account:
After closing the revenue and expense accounts to the Income Summary, we need to close the Income Summary to the K. Wilson, Capital account. The amount debited or credited will equal net income or net loss for the period, depending on the totals.
[tex]\[ \text{Assume Income Summary has a debit balance of} \quad \$119290 \quad \text{(total expenses)} \quad \text{and no revenue show}. \][/tex]
[tex]\[ \text{K. Wilson, Capital} \quad \text{(Debit)} \quad \text{Income Summary} \quad (Credit) \][/tex]
[tex]\[ 119290 \quad \qquad \qquad & & 119290 \quad \text{To close income summary with expenses} \][/tex]
4. Close Withdrawals Account to Capital Account:
The last step is to close the K. Wilson, Withdrawals account. We credit the Withdrawals account and debit the K. Wilson, Capital account for \$21700.
[tex]\[ \begin{array}{c} \text{K. Wilson, Capital} \quad \text{Debit} \quad \text{K. Wilson, Withdrawals (Credit)} \\ 21700 \qquad \qquad & & 21700 \quad \text{Withdrawals} \\ \end{array} \][/tex]
Upon completing these entries, we have successfully closed all temporary accounts and the accounts are ready for the next accounting period.
### Summary of Closing Entries:
1. Close expenses (by debiting Income Summary):
```
Debit Income Summary $119,290
Credit Depreciation Expense-Trucks $25,200
Credit Salaries Expense $66,100
Credit Office Supplies Expense $9,700
Credit Interest Expense $13,790
```
2. Close Income Summary to K. Wilson, Capital:
```
Debit K. Wilson, Capital $119,290
Credit Income Summary $119,290
```
3. Close K. Wilson, Withdrawals:
```
Debit K. Wilson, Capital $21,700
Credit K. Wilson, Withdrawals $21,700
```
These entries ensure all temporary accounts are closed and transferred to the K. Wilson, Capital account, reflecting the net effect of the period's operations on the owner's equity.
1. Close Revenue Accounts to the Income Summary:
If we had the actual revenue accounts listed, we would debit each revenue account for its balance and credit the Income Summary for the total amount. For simplicity, let's assume "Trucking revenue" is the only revenue we have, which is already balanced in the totals given.
[tex]\[ \text{In our example, we don't see individual revenue amounts to close. Let's proceed to the next step.} \][/tex]
2. Close Expense Accounts to the Income Summary:
We will credit each expense account and debit the Income Summary with the total expenses amount, which is:
- Depreciation Expense-Trucks: \$25200
- Salaries Expense: \$66100
- Office Supplies Expense: \$9700
- Interest Expense: \$13790
[tex]\[ \begin{array}{c} \text{Income Summary} \quad \text{Debit} \quad \text{Credit} \\ \hline 25200 \qquad \qquad & & 25200 \quad \text{Depreciation Expense-Trucks} \\ 66100 \qquad \qquad & & 66100 \quad \text{Salaries Expense} \\ 9700 \qquad \qquad & & 9700 \quad \text{Office Supplies Expense} \\ 13790 \qquad \qquad & & 13790 \quad \text{Interest Expense} \\ \end{array} \][/tex]
3. Close Income Summary to Capital Account:
After closing the revenue and expense accounts to the Income Summary, we need to close the Income Summary to the K. Wilson, Capital account. The amount debited or credited will equal net income or net loss for the period, depending on the totals.
[tex]\[ \text{Assume Income Summary has a debit balance of} \quad \$119290 \quad \text{(total expenses)} \quad \text{and no revenue show}. \][/tex]
[tex]\[ \text{K. Wilson, Capital} \quad \text{(Debit)} \quad \text{Income Summary} \quad (Credit) \][/tex]
[tex]\[ 119290 \quad \qquad \qquad & & 119290 \quad \text{To close income summary with expenses} \][/tex]
4. Close Withdrawals Account to Capital Account:
The last step is to close the K. Wilson, Withdrawals account. We credit the Withdrawals account and debit the K. Wilson, Capital account for \$21700.
[tex]\[ \begin{array}{c} \text{K. Wilson, Capital} \quad \text{Debit} \quad \text{K. Wilson, Withdrawals (Credit)} \\ 21700 \qquad \qquad & & 21700 \quad \text{Withdrawals} \\ \end{array} \][/tex]
Upon completing these entries, we have successfully closed all temporary accounts and the accounts are ready for the next accounting period.
### Summary of Closing Entries:
1. Close expenses (by debiting Income Summary):
```
Debit Income Summary $119,290
Credit Depreciation Expense-Trucks $25,200
Credit Salaries Expense $66,100
Credit Office Supplies Expense $9,700
Credit Interest Expense $13,790
```
2. Close Income Summary to K. Wilson, Capital:
```
Debit K. Wilson, Capital $119,290
Credit Income Summary $119,290
```
3. Close K. Wilson, Withdrawals:
```
Debit K. Wilson, Capital $21,700
Credit K. Wilson, Withdrawals $21,700
```
These entries ensure all temporary accounts are closed and transferred to the K. Wilson, Capital account, reflecting the net effect of the period's operations on the owner's equity.
