Problem:
The following financial information was taken from the books of Walker Spa:
Account Balances as of December 31, 2013
Accounts Recievable $54,000
Accounts Payable $15,000
Advertising Expense $7,000
Cash $ 80,600
Common Stock $ 40,000
Dividends $10,000
Land $27,000
Prepaid Rent $6,400
Rent Expense $15,600
Retained Earnings 1/1/2013 $38,800
Salaries Expense $64,000
Salaries Payable $23,600
Service Revenue $153,000
Supplies $800
Supplie Expense $5,000
Required:
Question 1: Prepare the journal enteries necessary to close the temporaryaccounts on December 31, 2013, for Walker Spa.
Question 2: What is the balance in the Retained Earnings account after the closing entries are posted?
Note: Provide support for your rationale.