financial accounting

ACT 200 Spring 2020

TAP 2 – 15% - Version 3

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Exercise 1. (75 points) World Company shows the following balances in selected accounts of its adjusted trial balance as of December 31,2019. Supplies 20,000 Service revenue 100,000 Supplies Expense 4,000 Depreciation expense 30,000 Accounts Receivable 10,000 Utilities expense 6,000 Dividends 15,000 Rent expense 13,000 Instructions: Prepare the closing entries at December 31, 2019. Exercise 2. (25 points) Describe the nature of the Income Summary account and identify what accounts should be closed using this account. Bonus question. (10 points) Please say if the statement is True or False. Closing revenue and expense accounts to the Income Summary account is an optional bookkeeping procedure.