(Learning Objective 5: Making closing entries and evaluating retained earnings) The accounts of Cookie Lapp eTravel, Inc., at December 31, 20X5, are listed in alphabetical order.
Note payable, long-term
Accumulated depreciation furniture
Retained earnings, December 31, 20X4
Unearned service revenue
1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Lapp’s closing entries at December 31, 20X5.
2. Set up a T-account for Retained Earnings and post to that account. Then compute Lapp’s net income for 20X5. What is the ending balance of Retained Earnings?
3. Did Retained Earnings increase or decrease during the year? What caused the increase or decrease?