At the end of the year, the adjusted trial balance for Drool Corporation contains the fol­lowing amounts for the income statement accounts (the balance in each account is the normal balance for that type of account).

Account	Balance
Advertising Fees Earned	$58,500
Interest Revenue	2,700
Wage and Salary Expense	14,300
Utilities Expense	12,500
Insurance Expense	7,300
Depreciation Expense	16,250
Interest Expense	2,600
Income Tax Expense	3,300
Dividends	2,000

Required

Prepare all necessary journal entries to close Drool Corporation's accounts at the end of the year.

Assume that the accountant for Drool forgets to record the closing entries. What will be the effect on net income for the following year?

 

Answer rating: 100% (QA)

Solution To close Drool Corporations accounts at the end of the year you need to follow these steps 1 Close all revenue accounts to Income Summary Thi... View the full answer