I get the adding, but how do I find the beginning balance and net income to use the equation? I'm lost in accounting.

Morris Company had the following adjustedtrial balance:

Additional Resources

Account Titles

Debit Credit

Cash $25,890

Accounts Receivable $17,520

Supplies $8,350

Equipment $37,400

Accumulated Depreciation $8,700

Accounts Payable 43,160

Deferred Rent Revenue $2,400

Capital $46,400

Drawing $16,200

Commission Revenue $60,800

Rent Revenue $6,100

Depreciation Expense $7,400

Utilities Expense $8,900

Supplies Expense $5,900

Total $127,560 $127,560

The president of Morris Company has asked you to close the books (process the closing entries).

Required:

EXPLANATION

After the closing, all the temporary accounts (Revenues, Expenses, and Drawing) should have zero balances. They have been closed to permanent accounts that now incorporate both balances.

(a)Capital has a balance before closing entries of $46,400. In the third closing entry, Capital is credited for the amount of net income of $44,700. In the fourth closing entry, Capital is debited for the amount of drawing, $16,200.

The ending balance in the capital account is calculated as follows:

Ending balance in capital

=

Beginning balance + Net income - Drawing

=

$46,400 + $44,700 - $16,200

=

$74,900

(b)In the first closing entry,revenueaccounts were closed to theIncome Summaryaccount, with a credit to the Income Summary account of $66,900. In the second closing entry, theexpenseaccounts were closed to the Income Summary account, with a debit to the Income Summary account of $22,200.

Before closing the Income Summary account to Capital, the Income Summary account has a credit balance representingnet income. Net income is calculated as follows:

Net income

=

Revenue - Expenses

=

$66,900 - $22,200

=

$44,700

Therefore, the amount transferred from the Income Summary account to the Capital account in the third closing entry is $44,700. After closing the Income Summary account to the Capital account, the Income Summary account will have a balance of $0.

(c)Commission Revenue is a revenue account. In the first closing entry, commission revenue is closed to the income summary account. Therefore, it has a balance of $0 after closing.

ANSWER

What is the balance in the Capital account?

$74,900

During the closing process, what amount was transferred from the income summary account to the Capital account in the third closing entry (i.e., after revenue and expense accounts have been closed to Income Summary)?

$44,700

What is the balance in the commission revenue account?

$0