Question - An accountant for Jolley, Inc., a merchandising enterprise, has just finished posting all year-end adjusting entries to the ledger accounts and now wishes to close the appropriate account balances in preparation for the new period.
1. For each of the accounts listed, indicate whether the year-end balance should be (a) carried forward to the new period, (b) closed by debiting the account, or (c) closed by crediting the account.
(a) Cash $ 25,000
(b) Sales 75,000
(c) Dividends 3,500
(d) Inventory 7,500
(e) Selling Expenses 7,900
(f) Capital Stock 100,000
(g) Wages Expense 14,400
(h) Dividends Payable $ 4,000
(i) Cost of Goods Sold 26,500
(j) Accounts Payable 12,000
(k) Accounts Receivable 140,000
(l) Prepaid Insurance 16,000
(m) Interest Receivable 1,500
(n) Sales Discounts 4,200
(o) Interest Revenue 6,500
(p) Supplies 8,000
(q) Retained Earnings 6,500
(r) Accumulated Depreciation 2,000
(s) Depreciation Expense 1,800
2. Give the necessary closing entries.
3. What was Jolley's net income (loss) for the period?