Question

These Income Statement columns from a 10-column work sheet are for Brown’s Bike Rental Company. Account Title Debit Credit Rent earned 93,000 Salaries expense 41,292 Insurance expense 5,859 Office supplies expense 13,671 Bike repair expense 2,883 Depreciation expense—Bikes 17,763 (1) Determine the amount that should be entered on the net income line of the work sheet. (2) Prepare the company's closing entries. The owner, H. Brown, did not make any withdrawals this period.

Answer 1

Answer:

Net income: $  11,532

Closing entries

rent earned     93,000 debit

    income summary     93,000 credit

--to close revenues accounts--

Salaries expense                     41,292 debit

Insurance expense                    5,859 debit

Office supplies expense           13,671 debit

Bike repair expense                   2,883 debit

Depreciation expense—Bikes  17, 763 debit

          Income Sumamry                           81,468‬ credit

--to close expenses accounts--

income summary   11,532 debit

        H. Brown, Capital Account 11,532 credit

--to close income summary--

Explanation:

Net Income: revenues - expenses:

Rent earned                                            93,000

Salaries expense                     41,292

Insurance expense                    5,859

Office supplies expense           13,671

Bike repair expense                   2,883

Depreciation expense—Bikes  17, 763

Total Expenses                                         81,468‬

Net Income                                              11,532

The closing entries are done to leave the temporary accoutns balance at zero.

These will be the revenues and expenses account and are closed against income summary.

then this account is closed agains retained earnings of owners capital accounts.