Exercise 2.

11 Closing journal entries

Metrotech, Inc., Slovak retailer of the automobile spare parts, has on June 2014,
year-end account balance of sales 456000, Interest revenue 13100, Cost of goods
sold 280900, operating expenses 147000, income-tax rate is 20%, and Dividends
15000.
Instructions:

a) What is Income before taxes for the Metrotech Inc.?

b) Calculate income tax expense.
c) How would you classify the account of Income summary? Prepare the year-end closing
entries.
c)
Dr.
Sales
COGS
Cr.

Dr.

Dr. Operating Exp Cr.

Dividends
Cr.

Dr. Income Summary Cr.

Dr.

Interest Rev

Dr. Income-tax Exp

Dr. Retained Earnings Cr.

Cr.

Dr.

Cr.

Dr.