Which account would not appear in a closing journal entry?

1. Depreciation expense
2. Cost of Goods Sold
3. Rent receivable
4. Dividends
5. Service revenue

The Kelly Company purchased a building for $75,000 in cash. What is the effect on current assets?

1. Increase in current assets
2. Decrease in current assets
3. No effect on current assets
4. Unable to determine

A company had $250,000 of current assets and $90,000 of current liabilities before borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on the amount of the company’s current ratio?

1. No effect
2. Increase
3. Decrease
4. Cannot be determined

After the closing process is complete, which of the following is false?

1. All accounts with a non-zero balance will be shown on the balance sheet.
2. The net income or net loss and the dividends for the period have been transferred to the retained earnings account
3. All temporary accounts have a zero balance
4. None of the above are false

A company had the following account balances at the end of its first year of operations. Find the missing amounts.

Cash	1,300	Accounts receivable	?
Inventory	400	Property and equipment	1200
Accounts payable	500	Salaries payable	800
Common Stock	1475	Retained earnings	525
Revenue	2500	Expenses	?
Net Income	570	Dividends	?

1. Determine Accounts Receivable
2. Determine Expenses
3. Determine Dividends

Accounts payable	$12,000	Accounts Receivable	20,900
Furniture	5,000	Accumulated Depreciation	6,500
Building	82,000	Cash	21,500
Common Stock	?	Sales Revenue	90,700
Cost of Goods Sold	51,500	Depreciation Expense	1,450
Dividends	6,600	Note Payable (due 3/1 Year 4)	20,000
Marketable Securities	1,400	Prepaid Expenses	18,000
Salaries Payable	2,800	Land	38,000
Note Payable (due 5/30 Year 2)	12,400	Service Revenue	22,550
Retained Earnings (1/1 Year 1 )	39,700	Salary Expense	18,000
Accrued Expenses Payable	1,500	Unearned Revenue	30,500
Utilities Expense	5,400

1. Determine Total assets on December 31, Year 1
2. Determine Current Liabilities on December 31, Year 1
3. Determine Net Income for the year ended December 31, Year 1
4. Determine the total amount of Common Stock on December 31, Year 1

The following accounts reflect the correct Year 1 year-end balances after adjustment but before closing.

Accumulated depreciation	225	Accounts payable	52
Accounts receivable	280	Cash	76
Common stock	100	Cost of goods sold	420
Depreciation expense	60	Dividends	20
Equipment	600	Interest expense	4
Inventory	90	Note payable, due 8/1/Y4	63
Prepaid rent	10	Rent expense	40
Retained earnings, 1/1/Y1	400	Salary expense	125
Sales revenue	855	Unearned revenue	30

1. Determine total assets
2. Determine total liabilities
3. What are retained earnings on the Dec. 31, Year 1 balance sheet?
4. Prepare the correct entry to close the Income Summary accounts.