Frosty Inc. has the following balances on December 31 prior to closing entries:
Revenues $ 35,000
Retained Earnings, Jan. 1 10,000
Cash 7,000
Expenses 23,000
Accounts Payable 4,000
Dividends 1,000
Supplies 18,000
Based upon the balances above, what net adjustment would be made to Retained Earnings due to closing entries?
A) Increase of $11,000.
B) Increase of $13,000.
C) Increase of $12,000.
D) Increase of $14,000.
Answer: A
Which of the following is a possible closing entry?
A) Debit Cash, credit Service Revenue.
B) Debit Cash, credit Retained Earnings.
C) Debit Service Revenue, credit Retained Earnings.
D) Debit Dividends, credit Retained Earnings.
Answer: C
The closing entry for expenses includes:
A) A debit to Dividends and a credit to all expense accounts.
B) A debit to Retained Earnings and a credit to all expense accounts.
C) A debit to Revenues and a credit to Retained Earnings.
D) A debit to Revenues and a credit to all expense accounts.
Answer: B
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