{"id":180542,"date":"2025-01-07T14:02:10","date_gmt":"2025-01-07T14:02:10","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=180542"},"modified":"2025-01-07T14:02:12","modified_gmt":"2025-01-07T14:02:12","slug":"the-sky-blue-corporation-has-the-following-adjusted-trial-balance-at-december-31","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/01\/07\/the-sky-blue-corporation-has-the-following-adjusted-trial-balance-at-december-31\/","title":{"rendered":"The Sky Blue Corporation has the following adjusted trial balance at December 31"},"content":{"rendered":"\n<p>The Sky Blue Corporation has the following adjusted trial balance at December 31. Credit Debit $ 1,280 2,500 2,800 3,500 14,500 $ 3,600 5,920 1,250 Cash Accounts Receivable Prepaid Insurance Notes Receivable (long- term) Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Income Taxes Payable Unearned Revenue Common Stock Retained Earnings Dividends Sales Revenue Rent Revenue Salaries and Wages Expense Depreciation Expense Utilities Expense Insurance Expense Rent Expense Income Tax Expense 3,400 700 2,900 1,200 350 46,530 350 22,600 1,800 4,720 1,900 6,500 3,400 Total $65,850 $65,850 Prepare closing Journal entries on December 31. (If no entry is required for a transaction\/event, select &#8220;No Journal Entry Required&#8221; in the first account field.) View transaction list Journal entry worksheet<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/01\/image-52-913x1024.png\" alt=\"\" class=\"wp-image-180543\"\/><\/figure>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Closing Journal Entries for Sky Blue Corporation on December 31<\/h3>\n\n\n\n<p><strong>Step 1: Close Revenue Accounts to Income Summary<\/strong><br>Close all revenue accounts by debiting them and crediting the <strong>Income Summary<\/strong> account.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Journal Entry<\/strong><\/li>\n<\/ol>\n\n\n\n<pre class=\"wp-block-code\"><code>   Account Title            Debit     Credit  \n   Sales Revenue           46,530  \n   Rent Revenue             3,400  \n       Income Summary                49,930  <\/code><\/pre>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Step 2: Close Expense Accounts to Income Summary<\/strong><br>Close all expense accounts by crediting them and debiting the <strong>Income Summary<\/strong> account.<\/p>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li><strong>Journal Entry<\/strong><\/li>\n<\/ol>\n\n\n\n<pre class=\"wp-block-code\"><code>   Account Title            Debit     Credit  \n   Income Summary          22,120  \n       Salaries and Wages Expense      4,720  \n       Depreciation Expense            1,900  \n       Utilities Expense               6,500  \n       Insurance Expense               3,400  \n       Rent Expense                    3,400  \n       Income Tax Expense              2,200  <\/code><\/pre>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Step 3: Close Income Summary to Retained Earnings<\/strong><br>The net income (Revenues &#8211; Expenses) is transferred to <strong>Retained Earnings<\/strong>.<\/p>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><strong>Journal Entry<\/strong><\/li>\n<\/ol>\n\n\n\n<pre class=\"wp-block-code\"><code>   Account Title            Debit     Credit  \n   Income Summary          27,810  \n       Retained Earnings              27,810  <\/code><\/pre>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Step 4: Close Dividends to Retained Earnings<\/strong><br>Dividends are closed by debiting <strong>Retained Earnings<\/strong> and crediting the <strong>Dividends<\/strong> account.<\/p>\n\n\n\n<ol start=\"4\" class=\"wp-block-list\">\n<li><strong>Journal Entry<\/strong><\/li>\n<\/ol>\n\n\n\n<pre class=\"wp-block-code\"><code>   Account Title            Debit     Credit  \n   Retained Earnings        3,400  \n       Dividends                       3,400  <\/code><\/pre>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation<\/h3>\n\n\n\n<p>Closing entries are journal entries made at the end of an accounting period to prepare accounts for the next period. The process involves:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Clearing temporary accounts (revenues, expenses, and dividends)<\/strong> to zero to ensure proper accumulation for the next period.<\/li>\n\n\n\n<li><strong>Transferring net income or loss<\/strong> to retained earnings, which reflects the cumulative earnings available to shareholders.<\/li>\n<\/ol>\n\n\n\n<p><strong>Revenue accounts<\/strong> are closed to the Income Summary to summarize total earnings.<br><strong>Expense accounts<\/strong> are closed to the Income Summary, reflecting total costs. The resulting balance in the Income Summary represents net income, transferred to <strong>Retained Earnings<\/strong>. Finally, <strong>Dividends<\/strong> are closed to Retained Earnings, reducing the shareholders&#8217; equity by the amount distributed to them.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Sky Blue Corporation has the following adjusted trial balance at December 31. Credit Debit $ 1,280 2,500 2,800 3,500 14,500 $ 3,600 5,920 1,250 Cash Accounts Receivable Prepaid Insurance Notes Receivable (long- term) Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Income Taxes Payable Unearned Revenue Common Stock Retained Earnings Dividends Sales Revenue [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-180542","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/180542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=180542"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/180542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=180542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=180542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=180542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}