Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year ending December 31. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $1,885,000 and Teresa Schafer, Drawing has a balance of $770,000. Required: (a) Journalize the entry required to close the Teresa Schafer, Drawing account. Refer to the Chart of Accounts for exact wording of account titles. (b) Determine the amount of Teresa Schafer, Capital at the end of the period.

a. To close off the Drawing account, post the drawing to the Capital account:

Date                    Account Details                                    Debit              Credit

December 31      Teresa Schafer, Capital                   $770,000

                            Teresa Schafer, Drawing                                        $770,000

b. Amount in Capital account.

Calculate Net income:

= Revenue - Expenses

= 3,190,000 - 2,350,000

= $840,000

                                   Teresa Schafer, Capital at December 31, 20XX

Opening Balance                                  $1,885,000

Add: Net income                                  $  840,000

                                                              $2,725,000

Less: Drawing                                       ($770,000)

Closing balance                                    $1,955,000

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