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4 October, 15:13

Wald Corporation's adjusted trial balance shows the following temporary accounts: service revenue: $20,000; salaries expense $8,000; insurance expense: $2,000; utilities expense: $3,000; interest expense $200; and depreciation expense: $1,400. As part of the the closing process, Wald should credit retained earnings for:

a. $5,400

b. $20,000

c. $14,600

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Answers (1)
  1. 4 October, 17:46
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    Correct answer is A $5,400

    Explanation:

    At the end of the calendar/fiscal year, all nominal accounts should be closed to retained earnings. And we need to make 2 entries.

    Closing entries:

    First, close all nominal accounts to income and expense summary account

    Debit Service revenue $20,000

    Credit Salaries expense $8,000

    Credit Insurance expense $2,000

    Credit Utilities expense $3,000

    Credit Interest expense $200

    Credit Depreciation expense $1,400

    Credit income & expense summary $5,400

    Second, close income and expense summary account to Retained earnings

    To close income & expense summary:

    Debit income and expense summary $5,400

    Credit Retained earnings $5,400
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