These items are taken from the financial statements of Sean McCann, CPA for 2019. Sean McCann, capital 1/1/19 $106,000 Sean McCann, Drawing 10,000 Equipment 130,000 Accumulated depreciation (equip) 32,000 Accounts payable 10,600 Cash 33,800 Supplies 7,000 Salaries payable 6,000 Fees earned 136,000 Salaries expense 66,000 Rent expense 14,200 Supplies expense 1,600 Depreciation expense 4,000 Utilities expense 2,400 Accounts receivable 28,000 Mortgage payable (due 12/31/35) 6,400 Instructions: 1. Prepare the journal entries to close your temporary accounts. (Hint: The temporary accounts are revenues, expenses and the drawing account) Date Description Debit Credit 2. Prepare an income statement and a statement of owner’s equity for the year ended December 31, 2019 and a classified balance sheet as of December 31, 2019. Sean McCann, CPA Income Statement For year ended 12/30/19 Sean McCann, CPA Statement of Owner’s Equity For Period Ended 12/31/19 Sean McCann, CPA Balance Sheet For Period Ended 12/30/19

1. Prepare the journal entries to close your temporary accounts.

the journal entries required to close the temporary accounts are:

December 31, 2019, closing of temporary revenue accounts

Dr Fees earned 136,000

    Cr Income summary 136,000

December 31, 2019, closing of temporary expense accounts

Dr Income summary 88,200

    Cr Salaries expense 66,000

    Cr Rent expense 14,200

    Cr Supplies expense 1,600

    Cr Depreciation expense 4,000

    Cr Utilities expense 2,400

December 31, 2019, closing of temporary income summary account

Dr Income summary 88,200

    Cr Retained earnings 88,200

December 31, 2019, closing of drawings account

Dr Retained earnings 10,000

    Cr Sean McCann, Drawing 10,000

2. Prepare an income statement and a statement of owner’s equity for the year ended December 31, 2019 and a classified balance sheet as of December 31, 2019.

          Sean McCann, CPA

            Income Statement

For the Year Ended December 31, 2019

Fees earned                                 $136,000

Salaries expense                         ($66,000)

Rent expense                               ($14,200)

Supplies expense                          ($1,600)

Depreciation expense                  ($4,000)

Utilities expense                           ($2,400)

Net income                                   $47,800

retained earnings = net income - drawings = $47,800 - $10,000 = $37,800

                     Sean McCann, CPA

                          Balance Sheet

         For the Year Ended December 31, 2019

Assets

Current assets:

Cash                                    $33,800

Accounts receivable          $28,000

Supplies                                $7,000

Total current assets                       $68,800

Non-current assets:

Equipment                         $130,000

Accumulated dep. (equip)-$32,000

Total non-current assets               $98,000

Total assets                                                    $166,800

Liabilities and equity

Current liabilities:

Accounts payable             $10,600

Salaries payable                $6,000

Total current liabilities                    $16,600

Long term liabilities:

Mortgage payable            $6,400

Total long term liabilities:                $6,400

Equity

Sean McCann, capital    $106,000

Retained earnings           $37,800

Total equity                                   $143,800

Total liabilities and equity                            $166,800

            Sean McCann, CPA

      Statement of Owner’s Equity

For the Year Ended December 31, 2019

Sean McCann, capital 1/1/19         $106,000

Net income                                     $47,800

Subtotal                                         $153,800

Drawings during the year             -$10,000

Sean McCann, capital 1/1/19         $143,800

4

step-by-step explanation:

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