Assume that the entry closing total revenues of $3,190,000 and total expenses of $2,350,000 has been made for the year. 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. (a) Journalize the entry required to close the Teresa Schafer, Drawing account. (b) Determine the amount of Teresa Schafer, Capital at the end of the period.

See explanation section

Explanation:

A) Closing Journal entry to record of closing the journal entry -

Debit Teresa Schafer, Capital $770,000

Credit Teresa Schafer, Drawing $770,000

(To close the drawing accounts to capital account)

B) Teresa Schafer, Opening Capital $1,885,000

Add: Net Income = $840,000

Less: Drawings = $ (770,000)

Capital at the end of the period = $1,955,000

Note: Calculation of Net Income

Revenues $3,190,000

Expenses $ (2,350,000)

Net Income $840,000