Answered

Welcome to Westonci.ca, where finding answers to your questions is made simple by our community of experts. Experience the convenience of getting reliable answers to your questions from a vast network of knowledgeable experts. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

The following is the adjusted trial balance at December 31 of Wilson Trucking Company:

\begin{tabular}{lrr}
Account Title & Debit & Credit \\
Cash & \[tex]$8,400 & \\
Accounts receivable & \$[/tex]17,900 & \\
Office supplies & \[tex]$3,400 & \\
Trucks & \$[/tex]176,000 & \\
Accumulated depreciation-Trucks & & \[tex]$89,000 \\
Land & \$[/tex]36,400 & \\
Accounts payable & & \[tex]$4,400 \\
Interest payable & & \$[/tex]60,000 \\
Long-term notes payable & & \[tex]$32,000 \\
Common stock & & \$[/tex]142,000 \\
Retained earnings & & \[tex]$134,000 \\
Dividends & \$[/tex]23,900 & \\
Trucking revenue & & \[tex]$62,200 \\
Depreciation expense-Trucks & \$[/tex]8,400 & \\
Salaries expense & \[tex]$12,400 & \\
Office supplies expense & \$[/tex]422,000 & \\
\hline
Interest expense & & \\
Totals & \[tex]$422,000 & \$[/tex]422,000 \\
\end{tabular}

Prepare the closing entries for the year ended December 31. The Retained Earnings account balance was \$142,000 at December 31 of the prior year.

Prepare the entry to close the dividends account.

Note: Enter debits before credits.

\begin{tabular}{|l|l|l|}
\hline
General Journal & Debit & Credit \\
\hline
December 31 & & \\
\hline
& & \\
\hline
\end{tabular}

Sagot :

GinnyAnswer
Sure, let's prepare the entry to close the dividends account for Wilson Trucking Company for the year ended December 31.

### Step-by-Step Solution

1. Identify the Dividend Account:
The dividends account shows the total amount of dividends declared by the company during the year, typically this is debited as it represents a reduction in retained earnings.

2. Understand the Closing Process:
At the end of the accounting period, dividends need to be closed to the Retained Earnings account to reflect the decrease in the company's retained earnings due to the dividends paid out.

### Journal Entry to Close the Dividends Account

1. Determine the Amount of Dividends:
From the adjusted trial balance, we can see that the dividends declared are: \[tex]$23,900. 2. Record the Closing Entry: - Debit Retained Earnings: To decrease retained earnings by the amount of the dividends. - Credit Dividends: To zero out the dividends account. ### Detailed Journal Entry \begin{tabular}{|l|l|l|l|} \hline \textbf{Date} & \textbf{Description} & \textbf{Debit (\$[/tex])} & \textbf{Credit (\[tex]$)} \\ \hline December 31 & Retained Earnings & 23,900 & \\ \hline & Dividends & & 23,900 \\ \hline \end{tabular} ### Calculate the Updated Retained Earnings Original Retained Earnings balance (before closing dividends): \$[/tex]20,400.

Subtract the declared Dividends:
\[tex]$20,400 - \$[/tex]23,900 = \[tex]$-3,500 (This indicates a negative retained earnings balance, implying an accumulated deficit.) ### Result After closing the dividends, the Retained Earnings at December 31 will be: \[ \text{Retained Earnings} = -\$[/tex]3,500
\]

So, the closing entry reduces retained earnings by the amount of dividends, resulting in the following:

1. Journal Entry:
[tex]\[ \text{Retained Earnings} \quad \text{Debit} \quad \$23,900 \][/tex]
[tex]\[ \text{Dividends} \quad \text{Credit} \quad \$23,900 \][/tex]

2. Updated Retained Earnings:
[tex]\[ -\$3,500 \][/tex]

This concludes the closing entries for the dividends account for Wilson Trucking Company for the year end.
Thanks for using our service. We aim to provide the most accurate answers for all your queries. Visit us again for more insights. We hope our answers were useful. Return anytime for more information and answers to any other questions you have. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.