Question

T-accounts have been opened using the balances from the adjusted trial balance. Post the closing entries to the t-accounts and calculate ending balances for each account. For accounts that have a zero balance, enter the zero on the normal balance side. Use the acronym for closing entries as post references and include Bal. references where appropriate. For the Income Summary account, calculate and enter the Balance (Bal.) before posting the entry to close out the account.

Date Accounts and Explanation Debit Credit
Dec. 31 Service Revenue 50,000
Income Summary
50,000
To close Revenue
Date Accounts and Explanation Debit Credit
Dec. 31 Income Summary 23,000
Retained Earnings
23,000
To close Income Summary
Date Accounts and Explanation Debit Credit
Dec. 31 Retained Earnings 24,000
Dividends
24,000
To close Dividends
Date Accounts and Explanation Debit Credit
Dec. 31 Income Summary 27,000
Depreciation Expense--Furniture
4,000
Interest Expense
6,000
Rent Expense
2,000
Salaries Expense
5,000
Supplies Expense
10,000
To close Expenses

Answer 1

To post the closing entries and calculate ending balances in T-accounts, we'll first summarize the provided information in T-account format. Below are the T-accounts that reflect the closing entries.

### T-Accounts

#### Service Revenue
```
Service Revenue
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 50,000
Dec. 31 50,000 Post Ref: C1
--------------------------------
Ending Balance: 0
```

#### Income Summary
```
Income Summary
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 23,000
Dec. 31 50,000 50,000 Post Ref: C1
Dec. 31 23,000 Post Ref: C2
Dec. 31 27,000 Post Ref: C4
--------------------------------
Ending Balance: 0
```

#### Retained Earnings
```
Retained Earnings
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 23,000 Post Ref: C2
Dec. 31 24,000 Post Ref: C3
--------------------------------
Ending Balance: 0
```

#### Depreciation Expense -- Furniture
```
Depreciation Expense - Furniture
-----------------------------------------
Date Debit Credit
-----------------------------------------
[Bal] 0
Dec. 31 4,000
-----------------------------------------
Ending Balance: 0
```

#### Interest Expense
```
Interest Expense
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 6,000
--------------------------------
Ending Balance: 0
```

#### Rent Expense
```
Rent Expense
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 2,000
--------------------------------
Ending Balance: 0
```

#### Salaries Expense
```
Salaries Expense
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 5,000
--------------------------------
Ending Balance: 0
```

#### Supplies Expense
```
Supplies Expense
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 10,000
--------------------------------
Ending Balance: 0
```

#### Dividends
```
Dividends
--------------------------------
Date Debit Credit
--------------------------------
[Bal] 0
Dec. 31 24,000
--------------------------------
Ending Balance: 0
```

### Summary of Balances
Given the above T-accounts, the closing entries have affected the balances as follows:

- **Service Revenue**: Closed to Income Summary, balance now **0**.
- **Income Summary**: After all closing entries, balance now **0**.
- **Retained Earnings**: Has a net increase of **(23,000 - 24,000) = -1,000** in this period, balance now **0**.
- All expenses and dividends have been closed out to the respective accounts, leading to zero balances for each.

### Conclusion
Each closing entry has successfully brought the temporary accounts (revenues, expenses, and dividends) to a zero balance, while their effects have been passed on to the **Retained Earnings** account, completing the closing process for this period.