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2. The following information is provided to you:

Income Statement Account of Birat Trading Concern
For the year ending 31st March, 2019

| Particulars | Rs. | Particulars | Rs. |
|----------------------------|------|------------------|-------|
| To Salaries | 15,000 | By Service revenue | 40,100 |
| To Rent | 7,500 | By Interest | 900 |
| To Advertisement | 1,000 | | |
| To Printing and stationery | 1,500 | | |
| To Carriage on sales | 2,000 | | |
| To Trade expenses | 4,000 | | |
| To Net income | 10,000 | | 41,000 |
| | 41,000 | By Opening retained earnings | 3,000 |
| To Balance old | 5,000 | By Net income | 10,000 |
| | 8,000 | | |
| | 13,000 | | 13,000 |

Required: Closing entries for:
(a) Expenses.
(b) Revenues.
(c) Net income.
(d) Dividend.



Answer :

GinnyAnswer
Alright, let's go through the closing entries step-by-step based on the provided information.

### Detailed Solution:

#### (a) Expenses
To close the expense accounts, we need to transfer the debit entries (expenses) to the Income Summary account. The following will be the journal entries:

1. Salaries Expense:
```
Income Summary Dr. 15,000
Salaries Expense Cr. 15,000
```
2. Rent Expense:
```
Income Summary Dr. 7,500
Rent Expense Cr. 7,500
```
3. Advertisement Expense:
```
Income Summary Dr. 1,000
Advertisement Expense Cr. 1,000
```
4. Printing and Stationery Expense:
```
Income Summary Dr. 1,500
Printing and Stationery Expense Cr. 1,500
```
5. Carriage on Sales Expense:
```
Income Summary Dr. 2,000
Carriage on Sales Expense Cr. 2,000
```
6. Trade Expenses:
```
Income Summary Dr. 4,000
Trade Expenses Cr. 4,000
```

The total expenses are closed to the Income Summary account:
```
Income Summary Dr. 31,000
```

#### (b) Revenues
To close the revenue accounts, we need to transfer the credit entries (revenues) to the Income Summary account. The following will be the journal entries:

1. Service Revenue:
```
Service Revenue Dr. 40,100
Income Summary Cr. 40,100
```
2. Interest Revenue:
```
Interest Revenue Dr. 900
Income Summary Cr. 900
```

The total revenues are closed to the Income Summary account:
```
Revenues Total: Dr. 41,000
Income Summary Cr. 41,000
```

#### (c) Net Income
Net income is the difference between total revenues and total expenses. We have:

- Total Revenues: Rs. 41,000
- Total Expenses: Rs. 31,000
- Net Income: Rs. 10,000

To close the Income Summary to Retained Earnings:
```
Income Summary Dr. 10,000
Retained Earnings Cr. 10,000
```

#### (d) Dividend
The question does not provide specific information regarding dividends, so no journal entries will be made for dividends.

To summarize the closing entries:

1. Closing Expense Accounts to Income Summary:
```
Income Summary Dr. 31,000
Salaries Expense Cr. 15,000
Rent Expense Cr. 7,500
Advertisement Expense Cr. 1,000
Printing and Stationery Expense Cr. 1,500
Carriage on Sales Expense Cr. 2,000
Trade Expenses Cr. 4,000
```

2. Closing Revenue Accounts to Income Summary:
```
Service Revenue Dr. 40,100
Interest Revenue Dr. 900
Income Summary Cr. 41,000
```

3. Closing Income Summary to Retained Earnings:
```
Income Summary Dr. 10,000
Retained Earnings Cr. 10,000
```

This completes the closing process for expenses, revenues, and net income for Birat Trading Concern.

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