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Closing and Reversing Entries

See attached file for full problem description.

On December 31, the adjusted trial balance of Garg Employment Agency shows the following selected data.

Accounts Receivable $24,000 Commission Revenue
Interest Expense $7,800 Interest Payable

Analysis shows that adjusting entries were made to (1) accrue $ 4,200 of commission revenue and (2) accrue
$ 1,500 interest expense.

Instructions:

A. Prepare the closing entries for the temporary accounts in December 31.
B. Prepare the reversing entries on January 1.
C. Post the entries in (a) and (b). Rule and balance the accounts (Use T accounts).
D. Prepare the entries to record (1) the collection of the accrued commissions on January 10 and (2)
the payment of all interest due ($2,700) on January 15.
E. Post the entries in (d) to the temporary accounts.

Attachments

Solution Preview

Please see the attached file.

A. Prepare the closing entries for the temporary accounts in December 31.

The temporary accounts are closed to the income summary account
The temporary accounts are the commission revenue and interest expense ( all income statement accounts are temporary accounts)

Dec. 31 Commission Revenue .............................. 92,000
Income Summary .............................. 92,000
31 Income Summary...................................... 7,800
Interest Expense ............................... 7,800

B. ...

Solution Summary

The solution explains how to prepare closing and reversing entries.

$2.19