The company's adjusted trial balance as follows includes the following accounts balances:

Cash, $15,000;

Equipment, $85,000;

Accumulated Depreciation, $25,000;

Accounts Payable, $10,000;

Retained earnings, $63,500;

Dividends, $2,000;

Sales, $56,000;

Sales Returns and Allowances, $3,000;

Sales Discounts, $1,500;

Depreciation Expense, $25,000; and Salaries Expense, $23,000.

All accounts have normal balances.

Required:

a. Prepare closing entry #1.

Expense & revenue summary a/c (credit balance) = $3500

Explanation:

1. Dr Expense & revenue summary 52500

Cr Sales discount 1500

Cr Sales return & allowance 3000

Cr Depreciation expense 25000

Cr Salaries expense 23000

(Close expenses to expense & revenue summary a/c)

2. Dr Sales 56000

Cr Expense & revenue summary 56000

(Close sales to expense & revenue summary a/c)

3. Dr Expense & revenue summary a/c 3500

Cr Retained earning a/c 3500

(To close expense & revenue summary a/c)

4. Dr Retained earning 2000

Cr Expense & revenue summary 2000

(Close dividend to expense & revenue summary a/c) d