Reference no: EM13484124
Assume for each of the following independent cases that the annual accounting period ends on December 31, 2013, and that the total of all revenue accounts was $141,000 and the total of all expense accounts was $125,500.
Case A:Assume that the business is a sole proprietorship owned by Proprietor A. Prior to the closing entries, the Capital account reflected a credit balance of $41,000 and the Drawings account showed a balance of $7,100.
Case B:Assume that the business is a partnership owned by Partner A and Partner B. Prior to the closing entries, the owners' equity accounts reflected the following balances: A, Capital, $31,000; B, Capital, $29,000; A, Drawings, $4,100; and B, Drawings, $8,100. Profits and losses are divided equally.
Case C:Assume that the business is a corporation. Prior to the closing entries, the stockholders' equity accounts showed the following: Capital Stock, par $10, authorized 21,000 shares, outstanding 10,500 shares; Additional Paid-In Capital, $4,100; Retained Earnings, $56,000.
1.Prepare all the closing entries required at December 31, 2013, for each of the separate cases.
Case A: Sole Proprietorship, closing entries:
1.Record the closing of the revenue and expense accounts to the proprietor's capital account.
2.Record the closing of the drawing account to the proprietor's capital account.
Case B: Partnership, closing entries:
1 Record the closing of the revenue and expense accounts to the partners' capital accounts.
2.Record the closing of the partners' drawing accounts to the partners' capital accounts.
Case C: Corporation, closing entry:
Record the closing of the revenue and expense accounts to the retained earnings account.
2.Show how the equity section of the balance sheet would appear at December 31, 2013, for each case.
Case A: Sole Proprietorship
Case B: Partnership
Case C: Corporation