Knowee
Questions
Features
Study Tools

At the end of the accounting period, prior to any closing entries, the balance of Fluffy and Ruffly Pet Services accounts included: the cash account $160,000, service revenue $210,000, and cost of goods sold $126,000. The profit for the period was $6,300. The closing entries results in the:Group of answer choicescash decreasing by $160,000, service revenue increasing by $210,000, cost of goods sold increasing by $126,000, and retained profits decreasing by $6,300.cash remaining unchanged at $160,000, service revenue decreasing to $0, cost of goods sold decreasing to $0, and retained profits decreasing by $6,300.cash remaining unchanged at $160,000, service revenue decreasing to $0, cost of goods sold decreasing to $0, and retained profits increasing by $6,300.None of the other answerscash decreasing to $0, service revenue decreasing to $0, cost of goods sold decreasing to $0, and retained profits decreasing to $0

Question

At the end of the accounting period, prior to any closing entries, the balance of Fluffy and Ruffly Pet Services accounts included: the cash account 160,000,servicerevenue160,000, service revenue 210,000, and cost of goods sold 126,000.Theprofitfortheperiodwas126,000. The profit for the period was 6,300. The closing entries results in the:Group of answer choicescash decreasing by 160,000,servicerevenueincreasingby160,000, service revenue increasing by 210,000, cost of goods sold increasing by 126,000,andretainedprofitsdecreasingby126,000, and retained profits decreasing by 6,300.cash remaining unchanged at 160,000,servicerevenuedecreasingto160,000, service revenue decreasing to 0, cost of goods sold decreasing to 0,andretainedprofitsdecreasingby0, and retained profits decreasing by 6,300.cash remaining unchanged at 160,000,servicerevenuedecreasingto160,000, service revenue decreasing to 0, cost of goods sold decreasing to 0,andretainedprofitsincreasingby0, and retained profits increasing by 6,300.None of the other answerscash decreasing to 0,servicerevenuedecreasingto0, service revenue decreasing to 0, cost of goods sold decreasing to 0,andretainedprofitsdecreasingto0, and retained profits decreasing to 0

...expand
🧐 Not the exact question you are looking for?Go ask a question

Solution

The correct answer is: cash remaining unchanged at 160,000,servicerevenuedecreasingto160,000, service revenue decreasing to 0, cost of goods sold decreasing to 0,andretainedprofitsincreasingby0, and retained profits increasing by 6,300.

Here's why:

At the end of an accounting period, closing entries are made to transfer balances from temporary accounts (like revenue and expense accounts) to permanent accounts (like retained earnings). This is done to prepare the temporary accounts for the next accounting period.

  1. The cash account is a permanent account, so its balance will not be affected by the closing entries. It remains at $160,000.

  2. The service revenue is a temporary account. Its balance will be transferred to the retained earnings account, reducing the service revenue to $0.

  3. The cost of goods sold is also a temporary account. Its balance will be transferred to the retained earnings account, reducing the cost of goods sold to $0.

  4. The retained earnings account is a permanent account. It will increase by the amount of the net income for the period, which is the service revenue (210,000)minusthecostofgoodssold(210,000) minus the cost of goods sold (126,000), giving a profit of 84,000.However,thequestionstatesthattheprofitfortheperiodwas84,000. However, the question states that the profit for the period was 6,300, so the retained earnings will increase by this amount.

This problem has been solved

Similar Questions

The accounts of Fluffy and Ruffly Pet Services show net sales of $63,000, operating expenses of $15,750, gross profit of $37,800, and profit before tax of $22,050. What was the cost of the inventory sold during the year?Group of answer choices$15,750$25,200None of the other answers$40,950$47,250Next

The accounts of Fluffy and Ruffly Pet Services show net sales of $140,000, operating expenses of $56,000, gross profit of $85,000, and net income of $29,000. What was the profit margin?Group of answer choices19.3%40.0%20.7%60.7%

Fluffy and Ruffly Pet Services reported $60,000 for current assets and $66,000 for other assets. It also had $42,000 of current liabilities and $58,800 of long-term liabilities. The quick assets totalled $36,000. What is the current ratio?Group of answer choicesNone of the other answers1.12:11.25:10.86:11.43:1

Fluffy and Ruffly Pet Services reported $140,000 for current assets and $196,000 for other assets. It also had $49,000 of current liabilities and $78,400 of long-term liabilities. The quick assets totalled $84,000. What is the amount of working capital?Group of answer choices$35,000$208,600$117,600$91,000None of the other answers

Fluffy and Ruffly Pet Services made a $2,800 credit sale on 13 Nov and received payment from the customer on 20 Nov. Ignoring GST and assuming no sales discount is involved, how would the credit sale be recorded on 13 Nov?Group of answer choicesIncrease cash by $2,800 and decrease accounts receivable by $2,800.None of the other answersIncrease cash by $2,800 and increase sales revenue by $2,800.Increase cash by $2,800, decrease accounts receivable by $2,800, and increase net sales revenue by $2,800.Increase accounts receivable by $2,800 and increase sales revenue by $2,800.

1/2

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.