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42) Woods, Inc. earned revenues of $11,000 and incurred expenses of $4,000. The company declared and
paid cash dividends of $3,000. What is the balance in the Income Summary account after closing net
income or loss to the Retained Earnings account?
A) debit balance of $11,000
B) credit balance of $4,000
C) credit balance of $7,000
D) balance of $0
43) What is the net result if the amount of net income for the year is less than the amount of the
Dividends?
A) Retained Earnings increases
B) Cash balance decreases
C) Cash balance increases
D) Retained Earnings decreases
44) Which of the following accounts has an ending balance equal to net income immediately before it is
closed?
A) Income Summary
B) Dividends
C) Net Income
D) Retained Earnings
45) The net income of Hendley, Inc. for the year is $35,000. The dividends declared during the year were
$43,000. Which of the following statements is true?
A) Retained Earnings account decreases by $35,000.
B) Retained Earnings account decreases by $8,000.
C) Retained Earnings account increases by $43,000.
D) Retained Earnings will remain the same.
46) The following is the adjusted trial balance for Baker Services.
Accounts
Debit
Credit
Cash
$34,000
Accounts Receivable
28,000
Prepaid Insurance
7,500
Office Supplies
3,000
Land
48,000
Building
150,000
Accumulated Depreciation—Building
$15,500
Equipment
71,000
Accumulated Depreciation—Equipment
7,000
Accounts Payable
23,000
Salaries Payable
4,000
Unearned Revenue
29,000
Mortgage Payable
100,000
Common Stock
10,000
Retained Earnings
11,500
Dividends
22,000
Service Revenue
280,000
Salaries Expense
62,000
Depreciation Expense—Building and
Equipment
5,900
Supplies Expense
14,000
Insurance Expense
14,600
Utilities Expense
20,000
Total
$480,000
$480,000
After the closing entries are posted, what is the balance in Retained Earnings?
A) $22,000
B) $185,000
C) $21,500
D) $153,000
44
Copyright © 2018 Pearson Education, Inc.
Diff: 3
LO: 4-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Closing Temporary Accounts - Net Income for the Period
47) Refer to the following adjusted trial balance after the first year of operations.
Accounts
Debit
Credit
Cash
$1,900
Accounts Receivable
8,900
Office Supplies
200
Equipment
22,300
Accumulated Depreciation— Equipment
$2,000
Accounts Payable
1,000
Salaries Payable
850
Unearned Revenue
400
Common Stock
3,600
Dividends
3,000
Service Revenue
55,150
Salaries Expense
23,000
Supplies Expense
2,000
Depreciation Expense— Equipment
1,700
Total
$63,000
$63,000
What will the balance of the Retained Earnings account be after the closing entries are posted?
A) $25,450
B) $28,450
C) $32,050
D) $31,450
48) The following is the adjusted trial balance as of December 31, 2019 of Martin Security Services, Inc.:
Accounts
Debit
Credit
Cash
$18,000
Accounts Receivable
30,000
Prepaid Insurance
9,000
Office Supplies
3,200
Land
45,000
Building
165,000
Accumulated Depreciation—Building
$12,000
Equipment
88,000
Accumulated Depreciation—Equipment
8,500
Accounts Payable
12,000
Salaries Payable
2,000
Unearned Revenue
25,000
Mortgage Payable
100,000
Common Stock
21,290
Dividends
25,840
Service Revenue
325,000
Salaries Expense
63,000
Depreciation Expense—Building and Equipment
6,250
Supplies Expense
15,000
Insurance Expense
14,500
Utilities Expense
23,000
_______
Total
$505,790
$505,790
Prepare the closing entry for revenues. Omit explanation.
Service Revenue
325,000
Income Summary
325,000
Diff: 1
LO: 4-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Closing Temporary Accounts - Net Income for the Period
49) The following is the adjusted trial balance as of December 31, 2019 of Barone Brothers, Inc.:
Accounts
Debit
Credit
Cash
$18,000
Accounts Receivable
30,000
Prepaid Insurance
9,000
Office Supplies
3,200
Land
45,000
Building
165,000
Accumulated Depreciation—Building
$12,000
Equipment
88,000
Accumulated Depreciation—Equipment
8,500
Accounts Payable
12,000
Salaries Payable
2,000
Unearned Revenue
25,000
Mortgage Payable
100,000
Common Stock
21,290
Dividends
25,840
Service Revenue
325,000
Salaries Expense
63,000
Depreciation Expense—Building and Equipment
6,250
Supplies Expense
15,000
Insurance Expense
14,500
Utilities Expense
23,000
_______
Total
$505,790
$505,790
Prepare the closing entry for expenses. Omit explanation.
Income Summary
121,750
Salaries Expense
63,000
Depreciation Expense—Building and Equipment
6,250
Supplies Expense
15,000
Insurance Expense
14,500
Utilities Expense
23,000
Diff: 1
LO: 4-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Closing Temporary Accounts - Net Income for the Period
50) The following is the adjusted trial balance as of December 31, 2019 of Wilson Repair Services, Inc.,
after the first year of operations:
Accounts
Debit
Credit
Cash
$18,000
Accounts Receivable
30,000
Prepaid Insurance
9,000
Office Supplies
3,200
Land
45,000
Building
165,000
Accumulated Depreciation—Building
$12,000
Equipment
88,000
Accumulated Depreciation—Equipment
8,500
Accounts Payable
12,000
Salaries Payable
2,000
Unearned Revenue
25,000
Mortgage Payable
100,000
Common Stock
21,290
Dividends
25,840
Service Revenue
325,000
Salaries Expense
63,000
Depreciation Expense—Building and Equipment
6,250
Supplies Expense
15,000
Insurance Expense
14,500
Utilities Expense
23,000
_______
Total
$505,790
$505,790
Prepare the closing entry for the Income Summary account. Omit explanation.
Income Summary
203,250
Retained Earnings
203,250
Notes:
Service Revenue $325,000
Salaries Expense - 63,000
Depreciation Expense—Building and Equipment - 6,250
Supplies Expense - 15,000
Insurance Expense - 14,500
Utilities Expense - 23,000
Net Income $203,250
Diff: 2
LO: 4-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Closing Temporary Accounts - Net Income for the Period
51) The following is the adjusted trial balance as of December 31, 2019 of Bright Exteriors, Inc., after the
first year of operations:
Accounts
Debit
Credit
Cash
$3,000
Accounts Receivable
45,000
Prepaid Insurance
9,000
Office Supplies
3,200
Land
45,000
Building
165,000
Accumulated Depreciation—Building
$12,000
Equipment
88,000
Accumulated Depreciation—Equipment
8,500
Accounts Payable
12,000
Salaries Payable
2,000
Unearned Revenue
25,000
Mortgage Payable
100,000
Common Stock
21,290
Dividends
25,840
Service Revenue
320,000
Salaries Expense
58,000
Depreciation Expense—Building and Equipment
6,250
Supplies Expense
15,000
Insurance Expense
14,500
Utilities Expense
23,000
_______
Total
$500,790
$500,790
Prepare the closing entry for the Income Summary account. Omit explanation.
Income Summary
203,250
Retained Earnings
203,250
Notes:
Service Revenue $320,000
Salaries Expense - 58,000
Depreciation Expense—Building and Equipment - 6,250
Supplies Expense - 15,000
Insurance Expense - 14,500
Utilities Expense - 23,000
Net Income $203,250
Diff: 2
LO: 4-3
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Application
H2: Closing Temporary Accounts - Net Income for the Period
52) The following is the adjusted trial balance as of December 31, 2018 of Bravo Photography:
Account
Debit
Credit
Cash
$1,700
Accounts Receivable
8,500
Supplies
100
Equipment
7,500
Accumulated Depreciation—Equipment
$2,000
Accounts Payable
1,200
Salaries Payable
800
Unearned Revenue
600
Common Stock
3,400
Dividends
2,300
Service Revenue
40,000
Salaries Expense
24,000
Supplies Expense
2,300
Depreciation Expense—Equipment
1,600
______
Total
$48,000
$48,000
Provide the closing entry for revenues. Omit explanation.
Service Revenue
40,000
Income Summary
40,000
53) The following is the adjusted trial balance as of December 31, 2019 of Brooks Design Studio:
Account
Debit
Credit
Cash
$1,700
Accounts Receivable
8,500
Supplies
100
Equipment
7,500
Accumulated Depreciation—Equipment
$2,000
Accounts Payable
1,200
Salaries Payable
800
Unearned Revenue
600
Common Stock
3,400
Dividends
2,300
Service Revenue
40,000
Salaries Expense
24,000
Supplies Expense
2,300
Depreciation Expense—Equipment
1,600
______
Total
$48,000
$48,000
Prepare the closing entry for expenses. Omit explanation.
Income Summary
27,900
Salaries Expense
24,000
Supplies Expense
2,300
Depreciation Expense—Equipment
1,600
54) If a business has a net loss, the Income Summary T account would hold a debit balance before the
account is closed.
