Assume for each of the following independent cases that the annual accounting period ends on December 31,
Question:
Assume for each of the following independent cases that the annual accounting period ends on December 31, 2011, and that the revenue and expense accounts at that date reflect a loss of $20,000.
Case A: Assume that the company is a sole proprietorship owned by Proprietor A. Prior to the closing entries, the capital account reflects a credit balance of $52,000 and the drawing account shows a balance of $9,000.
Case B: Assume that the company is a partnership owned by Partner A and Partner B. Prior to the closing entries, the owners’ equity accounts reflect the following balances: A, Capital, $43,000; B, Capital, $43,000; A, Drawings, $5,000; and B, Drawings, $7,000. Profits and losses are divided equally.
Case C: Assume that the company is a corporation. Prior to the closing entries, the stockholders’ equity accounts show the following: Common Stock, par $10, authorized 30,000 shares, outstanding 14,000 shares; Capital in Excess of Par, $9,000; Retained Earnings, $62,000.
Required:
1. Give all the closing entries indicated at December 31, 2011, for each of the separate cases.
2. Show how the owners’ equity section of the balance sheet would appear at December 31, 2011, for each case.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
Req 1 Case A Sole Proprietorship closing entries A Capital 20000 Individual revenue and expense acco...View the full answer
