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The following adjusted trial balance contains the accounts and year-end balances of Cruz Company as of December 31.
No. Account Title Debit Credit 101
Cash $ 18,000 126
Supplies 9,600 128
Prepaid insurance 2,000 167
Equipment 23,000 168
Accumulated depreciation—Equipment $ 6,500 301
A. Cruz, Capital 40,872 302
A. Cruz, Withdrawals 6,000 404
Services revenue 48,100 612
Depreciation expense—Equipment 2,000 622
Salaries expense 28,042 637
Insurance expense 2,020 640
Rent expense 3,223 652
Supplies expense 1,587
Totals $ 95,472 $ 95,472
1. Prepare the December 31, closing entries for Cruz Company. Assume the account number for Income Summary is 901.
2. Prepare the December 31, post-closing trial balance for Cruz Company. Note: A. Cruz, Capital was $40,872 on December 31 of the prior year.

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1. Preparation of the December 31, closing entries for Cruz Company.

General Journal

1. Dr Service revenue $48,100

Cr Income summary  $48,100

(To record closing entry for revenue)

2. Dr Income summary $36,872

($2,000+$28,042+$2,020+$3,223+$1,587)

Cr Depreciation expense-equipment  $2,000

Cr Salaries expense  $28,042

Cr Insurance expense  $2,020

Cr Rent expense  $3,223

Cr Supplies expense  $1,587

(To record closing entry for expense)

3. Dr Income summary $11,228

Cr Retained earnings  $11,228

($48,100-$36,872)

(To close income summary account)

4. Dr Retained earnings $6,000

Cr Dividend  $6,000

(To close entry for dividend)

2. Preparation of  the December 31, post-closing trial balance for Cruz Company

Debit side

Cash $18,000

Supplies $9,600

Prepaid insurance $2,000

Equipment $23,000

Total Debit side $52,600

Credit side

Accumulated depreciation—Equipment $ 6,500

Retained earnings $46,100

($40,872+$11,228-$6,000)

Total Credit side   52,600

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