EX 4-16 Closing entries with net income

Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $1,885,000 and Teresa Schafer, Drawing has a balance of $770,000.

(a) Journalize the entry required to close the Teresa Schafer, Drawing account. 

(b) Determine the amount of Teresa Schafer, Capital at the end of the period.

Answers:

a. Teresa Schafer, Capital        770,000

            Teresa Schafer, Drawing            770,000

b. $1,955,000 ($1,885,000 + $3,190,000 – $2,350,000 – $770,000)